Homeowners could be billed for fire department cost-recovery fee
LONDON, ONT. -- London homeowners, or their insurance companies, could soon start receiving bills from a collection agency every time the fire department responds to an emergency at their home.
City council’s community and protective services committee (CAPS) is being asked to consider a proposed cost-recovery program which would include a fee for service that's not currently being charged. It’s money that’s out there for the taking, according to Coun. Elizabeth Peloza.
“You know the budget was tight. We were asked to save money. And this is money that most insurance companies have collected,” she said. “You've bought your policy and the money is sitting there and if there's an opportunity to collect that money and bring it back and help subsidize or pay for services by the fire department, absolutely.”
Peloza wants the city to look into contracting out a third-party collection agency, Fire Marquee, to recoup fees that are now absorbed by taxes.
She says the city could recover between $291,461 and $485,769 per year, even after paying the collection agency a 30 per cent commission.
The system is already in place in many smaller Ontario municipalities according to Suzanne Pountney of Ontario West Brokers in London. But she adds that, unlike London, those municipalities may rely on volunteer fire departments, and may not have the same level of resources as a city the size of London.
Further, it may be a solution to a problem that never existed. “If the municipality was never charging it, which is the case in London, it's not money that's out there,” she said. “If London was charging this money to consumers already, and this company was just coming in saying 'Hey let us help you with collecting that,' that would be a totally different story.”
According to the insurance industry, if the city were to begin collecting this fee, insurance premiums would most assuredly go up.
“Insurance companies, they base the premiums they charge on what they're paying out in claims,” said Pountney. “If London becomes a municipality that's tacking $500 onto every fire, London's rates go up.”
Pountney said in municipalities that charge the fee the home-owner gets billed directly, then seeks reimbursement from their insurance company.
But Peloza tells CTV News that in London’s case, the insurance company would get the bill, and not the home-owner, should the cost-recovery program go ahead.