California Insurers Oppose ‘Crash Tax’

January 25, 2011

An ordinance up for consideration at tonight’s Sacramento City Council meeting is bad news for local businesses and is unfair to consumers that shop, work or visit the City of Sacramento, according to the Association of California Insurance Companies (ACIC). This ordinance, which is up for debate as agenda item No. 11 this evening at the City Council meeting, proposes to charge a fee to out-of-town drivers who get into auto accidents in order to fund the fire department’s response services. The fee would be imposed on non-resident drivers, regardless of fault.

“Given the difficult economy, it is understandable why the City of Sacramento is looking for new revenue sources. However, putting this burden on out-of-town drivers is unfair,” said Sam Sorich, ACIC president. “We are opposing this ordinance because it will hurt our customers. This ordinance anticipates contracting with a third-party that will charge auto insurance companies for the recovery fees, but the fact is the typical auto insurance policy was never intended to cover these fees. A typical policy pays for injuries and property damage. It does not pay for a fire department’s response to an accident.”

Sorich said he intends to testify against the proposed ordinance. The Sacramento City Council has discussed this proposal several times, most recently back in November. A vote was put over so there was more time for consideration.

“It is questionable that this ordinance will generate the projected revenue,” Sorich added. “Moreover, if insurance policies are required to cover the response fees, consumers will pay the price because insurance costs will increase … If this ordinance is approved, the at-fault driver who is a Sacramento resident gets no extra bill while the innocent non-resident driver gets a bill for hundreds of dollars. That is simply not fair. The ordinance sends a terrible message. As California’s capitol city,

The Association of California Insurance Companies (ACIC) is an affiliate of the Property Casualty Insurers Association of America (PCI) and represents more than 300 property/casualty insurance companies doing business in California.

Source: ACIC

Topics Carriers California

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