Insurance Companies May Not Include Taxes and Fees in Car Total Loss

Reportedly, thirty-four states have laws in place requiring auto insurance companies cover the cost of sales tax when purchasing a new vehicle after a car total loss accident. These laws would apply whether the insured sought to replace the car total loss with a used or new automobile.

According to Insure.com, whether or not a person that has been unfortunate enough to be involved in such an accident actually sees the cost of sales tax covered might have more to do with direct inquiry than the law, however.

Even in some states where this law is not on the books following a total loss, a simple request might get this reimbursement if a vehicle is purchased and the inquiry made within the common one-month deadline after the loss declaration.

By the same token, depending on the state in which the car owner lives, according to some reports, car owners still might have to directly ask for sales tax reimbursement within 30 days as it might not be offered without doing so.

Like most companies, insurance companies exist to turn a profit. In this sense, it is up to the buyer to  read contracts, get educated, and seek clarification before they are put in the position of a car total loss.

It is also often required by law or written into policy contracts that additional fees such as the cost of registering and titling a new or used vehicle after a car total loss be reimbursed by insurance companies. This is especially true in states that have enacted this requirement into law.

The caveat with these reimbursements is that they are based upon the value at the time of the accident of the automobile involved in the car total loss. If a serious upgrade from a used to a new vehicle is made, a car owner should not expect full sales tax return.

A Class Action Lawsuit Holds Geico Accountable

In May 2018, an insurance company’s alleged failure to reimburse sales tax, registration and title fees in Florida—a state where enacted laws make this compulsory—led to a legal claim.

This class action lawsuit alleged that Geico breached their own contract with plaintiff and other insureds by failing to include sales tax and title transfer fees following car total loss accidents in cash value payments to their clients.

Both Geico and the plaintiff decided to pursue summary judgment on this legal claim. The plaintiff in this landmark case had a leased vehicle for which there was allegedly no contract language or premium payment difference from an owned vehicle. Geico put forth before the judge that financed and leased vehicles are considered “owned autos” as indicated in their contract.

The insurer’s failure to specifically separate the ambiguous contract language led the federal judge to rule on behalf of the plaintiff. He also noted that Florida law requires sales tax and title transfer fees on replacement automobiles regardless of whether they are owned, leased or financed by the claimant.

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 by your insurance company in the last 5 years, you may qualify to join a total loss car accident class action lawsuit investigation.

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