Car Totaled in Texas: Were You Fully Compensated?

Consumers who have a car totaled in Texas may have been undercompensated if their total loss settlement did not include sales tax and certain fees.

When Is a Car Totaled in Texas?

A car is declared a total loss after a car accident if the cost of repairs either exceeds the value of the car or exceeds a certain limit, according to the Texas Department of Insurance.

These limits, known as total loss thresholds, vary based on state regulations. However, most states set the total loss thresholds at between 75 percent and 80 percent, according to Total Loss Appraisals.

In Texas, damage to a vehicle must exceed the car’s pre-accident fair market value in order to be declared a total loss, according to Value Penguin.

The actual cash value of a vehicle will be determined based on the age of the vehicle, usage, past accidents, depreciation, and other factors. However, this value is often times hundreds or thousands of dollars below what consumers paid originally.

After a vehicle is declared a total loss, the insured driver will be offered a total loss settlement. This amount will vary depending on individual insurance policy terms, company policies, and the value of the vehicle.

Although many consumers are satisfied by their total loss settlement offers, others may feel they deserve more — especially if their total loss settlement does not include sales tax or fees. Between the sales tax on a vehicle’s purchase and the fees required to register or transfer a title, these seemingly small expenses can add up quickly.

Receiving Full Compensation for a Car Totaled in Texas

If a person’s vehicle was declared a total loss in Texas but they were denied sales tax and other fees, they may be entitled to more compensation.

Consumers have already taken legal action against insurance companies, arguing the insurers routinely fail to include sales tax and other fees in total loss settlements. This practice allegedly cheats consumers out of hundreds of dollars.

In March, two Texans filed a class action lawsuit against Elephant Insurance, arguing the company fails to include sales tax and transfer fees as a part of vehicles’ actual cash value. According to the plaintiffs, this failure violates the company’s own policies.

You may be eligible to take similar action. Attorneys are interested in speaking to consumers who meet the following criteria:

• Their leased vehicle was totaled in an accident within the last five years.
• Their insurance company paid for the total loss settlement.
• Their insurance company failed to pay for sales tax and other fees.

Legal professionals are especially interested in speaking to Texas residents who insured their leased vehicle through GEICO.