Over the last three or four years as the recession has bitten into government revenues and deficits have risen, many have turned to accident fee billing as a way of adding to the state’s or local government’s income. The idea is simple. If there’s a traffic accident and an ambulance, fire services and the police attend, the drivers involved get bills sharing out the cost of these public services. As you might imagine, this is somewhat controversial and, in some states, there’s been a major backlash of public opinion. Indeed, the lawmakers in thirteen states have formally outlawed the practice. In others, at a local level, the bills are only sent to nonresidents. The theory here is that local people already pay for local services through their taxes. That means they are less likely to care if their local government tries to recover costs from those passing through. So how does it all work?

All the equipment used by the fire department has a cost starting with depreciation, through maintenance, and finally to the labor to deploy the equipment to the crash scene. When asked, most departments produce a cost-per-hour for dealing with the emergency call, allocating staff to the firetruck, ensuring all the necessary equipment is on board, the gas to power the truck to the accident, and so on. Needless to say, this is an expensive proposition even if there’s nothing for the men to do when they arrive. Indeed, they may actually arrive after the vehicles involved in the less serious accidents have driven away. This is not a criticism of the speed of the fire service’s response. Sometimes third parties call out the rescue services not being sure whether there will be a fire or there will be a need to cut people out of the wreckage. The same applies to ambulances and, to some extent, the law enforcement officers.

Whenever there are costs, the fire or ambulance services usually employ a statewide or national billing service. The arrival of the bills, often more than $1,000, is a shock. To many owners, this feels like extortion because of the implied threat to their credit score if payment is refused. They are unimpressed by the argument this is helping local governments keep services solvent without raising taxes. Worse, the majority of insurance companies refuse to pay them. Even the cost of ambulances is often disputed by the insurers. These public-spirited companies argue fire, ambulance and hospital departments are legally required to provide a free emergency service to the public. Any charges are nothing more than an unlawful excise tax. Never wanting to duck an argument, the public services reply an auto insurance company is contractually obliged to meet the liabilities of its insured. Trying to pass on these costs to the taxpayers is therefore unlawful.

Until we get a definitive court case to resolve this argument, you are left in the middle. If your insurer refuses to pay and the billing company insists, this is not a comfortable position. The best answer is to make a formal complaint to your state’s Attorney General and the Insurance Commissioner. Hopefully, they can resolve it between them. If you live in a state that allows billing, check the auto insurance quotes on this point before buying.