Pennsylvania state lawmakers are considering legislation prohibiting municipalities from charging insurers or residents for police services related to auto accidents.
John Eager, director of claims for the Property Casualty Insurers Association of America, said that local governments are increasingly seeking to charge back or direct-bill property-casualty insurers for emergency response costs.
"Some third-party businesses are erroneously advising local municipalities that emergency service costs are covered under insurance contracts in all cases, and insurers, with the assistance of these third parties, are being billed directly by the emergency service providers," he said.
In some cases, this is being done pursuant to local ordinances. In other cases, the billing is being done unilaterally by local public safety officials.
House Bill 131 would end this practice for police department charges.
"However, PCI is encouraging legislators to expand the prohibition to fire and other emergency responder charges," he said.
Pennsylvania took the lead on this issue because some lawmakers had been contacted by constituents who ultimately had to pay the bill when the insurer denied coverage.
"Since communities base their tax structure on the cost of services provided, adding charge backs as a source of revenue amounts to a form of double taxation," Mr. Eager said. "The role of the police and fire department should be to serve and protect, not serve and collect."
No other state has addressed this issue, and Mr. Eager said the PCI hopes the Pennsylvania outcome will serve as impetus for changes in other states.
He had no figures on how many cities throughout the country engaged in the practice of charge backs.
Consumers and policyholders are already registering their strong and angry voices to third-party vendors billing them for the services they thought were coming from their local taxes. Radnor Township in Pennsylvania recently dropped its practice of billing for police services and refunded nearly $47,000 it had collected after complaints and bad publicity regarding the program, Mr. Eager noted.
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