Extra Fee For Minnesota Auto & Home Insurance Policyholders

MINNEAPOLIS (WCCO) – Take a close look at your homeowner and auto insurance policies — the cost may be going up.

Minnesota lawmakers are considering a bill to add a $5 surcharge on every policy in the state.

It’s a way to help restore pensions for firefighters and police officers, but adding $5 to every one of those insurance policies is turning out to be very controversial.

Thousands of public worker pensions took a hit when the stock market took a nosedive in 2008. And police and firefighter pensions are a class apart, because only the legislature can fix them.

In addition, the public may not realize that they already pay for police and fire pensions on their homeowners and auto insurance policies. It was actually the first-ever tax imposed by the state of Minnesota, back in 1871.

“The pension funds are not fully funded as a result of the stock market going down, and those returns on investments are lighter than they have been in past years,” Rep. Joe Atkins said.

There’s a $23 million shortfall in police and firefighter pension funds, and there’s no safety net for police and firefighters. They don’t qualify for regular social security, or disability.

And supporters say it’s a trade-off for public safety.

“I guess what I would say to those people is, ‘OK then you go into the burning building, you go chase the guy down who has just robbed your grandmother,’” lobbyist Brian Rice said.

To make their pensions whole, police and firefighters agreed to increase their pension contributions, to put a cap on pension benefits, and to restrict early retirement.

But critics say it’s not enough, because non-public workers don’t get the same help.

“You got hard working folks all over this state who are having a very difficult time,” Sen. Dave Thompson said. “People losing jobs, people in jeopardy of losing jobs, and then we are going to hit them up to solve a problem for a specific group of people.”

The $5 surcharge would raise $15 million from auto insurance policy owners, and $7.5 million from homeowners.

Early estimates are that it would take seven years to raise enough money to make the pensions whole, and then the surcharge would end. 

Article By Pat Kessler CBS-Minnesota WCCO website