Policy Documents

Ominous Trend: Growth of Municipal Accident Response Fees

Tami Stanton and Joe Thesing –
April 1, 2006

Across the country and in most Midwestern states, including, Illinois, Indiana, Iowa, Michigan, Missouri, Ohio and Wisconsin, insurance companies are facing the growing phenomenon of cash-strapped municipalities billing insurance companies for police or fire responses to auto accidents, no matter how routine or minor.

According to anecdotal information, municipalities in no less than 13 states are billing for accident responses. Municipalities typically charge $100 to $300 per “run,” however bills sent to insurers lack specific information. Municipal fire departments in some states have been billing insurance companies for ambulance services for several years because typical auto insurance policies cover medical expenses, including ambulance transportation, but do not cover expenses related to accident response. Therefore, auto insurers are questioning the logic of paying fees for services not covered or charged for in auto insurance policies.

Providing coverage for police or fire responses to auto accidents would most likely result in rate increases passed along to consumers. Responding to and investigating auto accidents are functions of police departments supported by local taxes. Some municipalities have argued that insurers should pay these fees because accident reports are prepared solely for the benefit of insurers, however, personal injury lawyers and hospitals also rely on these reports. Why aren’t they being charged these fees?