Passaic County to Charge Insurance Companies for Emergency Fees

April 20, 2012
A new ordinance in Passaic allows the city to collect a fee when firefighters respond to an emergency, with the exception of structure fires.

A new ordinance in Passaic allows the city to collect a fee when firefighters respond to an emergency, with the exception of structure fires. So who gets the bill? Insurance companies.

Bill Ballinger, President of Allstate New Jersey Insurance, considers this a form of double taxation. He says, “Allstate New Jersey opposes these fees cause we believe our policyholders shouldn’t have to pay services they already paid through municipal and fire district taxes.”

City officials did not return our calls for comment, but in a letter to residents, the mayor said “this (proposal) will help raise important revenue to reimburse the city’s fire department for materials and supplies.” The new fees come at a time when costs and fire calls are on the rise, according to the mayor.

Bill Ballinger of Allstate New Jersey says he understands the financial constraints fire departments face because he is also the fire chief of a volunteer fire company.

“The cost of running a fire department is a very real issue. However, putting our residents in a position where they have to make a contemplation of can we afford calling the fire department, can we afford calling public safety. is not something we believe in,” said Ballinger.

So what happens if the insurance company won’t pay the fee? The mayor’s letter states that local residents and policyholders are not involved in any way with the cost recovery process. And the city will only submit a claim if the insurance policy includes a provision to cover these costs.

But Deana Lykns of the Insurance Council of NJ says in other states the bill is typically sent to policy holders because most insurance providers don’t include these fees in their policies.

Allstate New Jersey is one of the few that does reimburse homeowners for emergency response fees. But Ballinger doesn’t believe any claims have been filed yet seeking this reimbursement.

Passaic officials claim municipalities in other states with similar cost recovery programs haven’t faced premium increases or insurability problems. But Ballinger says it’s likely these costs would be passed on to consumers.

Thirteen states have banned municipal accident response fees. However, these fees are permitted in about two dozen states, including New Jersey. State senator Anthony Bucco plans to introduce legislation that would put a cap on these fees.

Said Bucco, “I don’t think they’re warranted because you’re already paying for these fees through property taxes.”

Arthur Ondish, the president of New Jersey League of Municipalities, says the league doesn’t take a position on this issue .. but he points out tight budgets have forced local officials to find new ways to pay for services.

According to Ondish, “every municipality is looking to save money where ever they can. They’re re-evaluating the way they do things, the processes, the services they provide.”

Passaic’s emergency fee ordinance goes into effect next month.

Desire Taylor files this report from Passaic.