Car Insurance Total Loss Coverage May Extend to Tax and License Fees

Consumers whose vehicles have been “totaled” are filing insurance total loss class action lawsuits against insurers who have allegedly failed to honor the terms of their policies.

In this context, “totaled” means that the vehicle total loss value is greater than the cost of repairs – in other words, it will be less expensive for the insurance company to replace the vehicle than to have it fixed. This often means that an insured receives less than the vehicle total loss value through the insurance total loss payment made.

What Does “Insurance Total Loss” Mean?

An insurance contract includes what’s known as “declarations,” or a “dec sheet.” If, following an accident, an adjuster determines that repair costs exceed the replacement value of the vehicle, it is declared an insurance total loss. This means that if a policy is still in force at the time of an accident and the insured has paid for the appropriate coverage, the insurer is legally obligated to reimburse all costs associated with replacing the vehicle.

The settlement should also include any state and local sales tax, title transfer fees and other costs of replacing the vehicle in question.

Unfortunately, some insurers are reportedly failing to including these extra costs in the vehicle total loss value. This issue has led consumers to seek remedies through the courts.

Insurance Total Loss Class-Action Lawsuit Ends in Favor of Plaintiff

In August 2016, a woman whose vehicle was declared “totaled” initiated a class action lawsuit against a major insurer, claiming breach of contract. She alleged the vehicle total loss value she received for her claim did not cover the tax and licensing fees on her vehicle. Her complaint stated that according to the language in her policy,  such added expenses should have been covered.

The defendant claimed that the policy in question, as well as state law, made it clear that tax and licensing fees are not covered. They also claimed that there was a difference between a vehicle that is “owned” and one that is “leased.” However, the judge found that the insurer had failed to make that distinction clear. Under the laws of that jurisdiction, anything in the policy that is unclear or ambiguous is to be interpreted in favor of the insured.

The Judge Rules Tax and License are Part of “Full Value”

In his ruling, the judge wrote, “Sales tax and title transfer fees are mandatory parts of the replacement cost.” This is significant because in the case of a vehicle that is declared to be an insurance total loss, those taxes and licensing fees can add up to several hundred or even thousands of dollars.

The entire purpose of insurance is to restore insureds to the condition in which they were prior to the loss. If such fees are not taken into consideration, the insurer has violated its contract with the insured, according to the court’s ruling  in this recent insurance total loss class action.

Insurance regulations vary somewhat from one jurisdiction or state to another. Generally, however, if an insurer has refused to cover sales tax, tab transfer fees, and licensing costs, the insured may have grounds to file an insurance total loss lawsuit.

Join a Free Total Loss Car Accident Class Action Lawsuit Investigation

If you were insured under an auto insurance policy, experienced a total loss car accident, and were not reimbursed for sales tax and other fees, you may qualify to join a total loss car accident class action lawsuit investigation.

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