When I order a meal in a restaurant, I expect to be handed a bill. I'll even give a generous tip for good service. But I don't expect to have to pick up the check when a cop shows up at the scene of an accident, or a fire fighter drops by to put out a blaze. Yet such fees are becoming more prevalent as municipal governments struggle to balance their budgets without raising taxes. Insurers are fighting to discourage what they call “double-taxation,” but it might be a losing battle as the economy tanks.

Foes of emergency service fees suffered a tough defeat last week when the National Conference of Insurance Legislators rejected a request to encourage adoption of laws outlawing such surcharges.

As reported by our own Dave Postal, law enforcement officials convinced NCOIL to back off, arguing that “such fees are necessary because cash-strapped communities would otherwise have to curtail necessary police and fire services, especially to those involved in accidents that live outside the community.”

Thanks for nothing. (To read Mr. Postal's complete coverage, click here.)

An entire industry has sprung up to service this growing trend. Indeed, the president of a Dayton, Ohio firm–Regina Moore of Cost Recovery Corp.–was one of those testifying at NCOIL against any effort to snuff out the service fee movement. (To learn more about this firm and to read what they have to say about insurance, click here.)

Why are insurers up in arms about this? Beyond mere civic interest, carriers are concerned that policyholders will expect them to cover any service fees when a fire department puts out a home or office blaze, or when a police officer files an auto accident report.

The fact is most policies don't cover such extraordinary administrative expenses, but before long, if this trend catches on nationwide, look for consumer groups to demand that these fees be part of the overall insured exposure.

If that happens, good luck to insurers trying to pass along the risk to policyholders. Carriers will have to fight to keep from being stuck with the tab.

Vendors are convincing municipalities that the insurance industry is sitting on a piggy bank, said Joseph Thesing, director of state affairs for the National Association of Mutual Insurance Companies, who testified before the NCOIL panel.

These services are not typically covered by insurance, but if more municipalities undertake these billing practices, more insurers will be paying more claims and, ultimately, those claims will result in higher rates, Mr. Thesing warned.

Missouri and Pennsylvania have already banned such fees, according to the American Insurance Association, and the Indiana legislature just sent a bill to the governor to follow suit. But that still leaves 47 states out there with no such prohibition.

Where does this stop? Should FEMA be charging back communities when they come to the rescue after natural catastrophes? (If so, I would demand my money back, given the poor service lately in New Orleans). What about the National Guard? The Coast Guard? The IRS, when they process our tax returns? Should there be a surcharge on all foods and drugs to cover FDA oversight?

On the other hand, we do have to pay to have any standard paperwork done–to get a drivers license, a library card, a liquor license, and many other permits. Why should emergency services be any different?

What do you folks think?

Special Reports /

How Much Do I Owe You, Officer?

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