Motorists who have been involved in a car accident are entitled to recover taxes and fees under Ohio’s total loss insurance law, but they must take the proper steps in order to do so.

A total loss claim differs from more minor claims in that it requires more effort on the part of the insured party, according to Value Penguin. 

What Is Considered Total Loss?

MAPFRE Insurance Vice President of Claims, David Antocci, told AAA Ohio that what is considered total loss depends on a state’s regulations and statutes, as well as an individual insurance company’s policy language.

Under Ohio insurance total loss law, a vehicle is considered a total loss when a claims adjuster determines the repair cost will exceed the vehicle’s value.

Many disputes arise in this situation.

“As a rule of thumb, a totaled vehicle’s damages equal roughly 75 percent of its actual cash value,” Antocci said. 

However, a totaled vehicle’s value is typically determined by a combination of factors, including purchase price and improvements as well as old or unrelated damage that was present before the accident occurred. Also taken into consideration are the vehicle’s blue book value and similar vehicles that have been sold recently or are currently for sale.

Often a comprehensive auto insurance policy will offer the vehicle’s replacement cost, minus depreciation and deductible. The settlement is therefore not based on the actual replacement cost but on the vehicle’s fair market value at the time of the collision.

Am I Covered for a Total Loss?

Consumers carrying property damage liability or comprehensive or collision insurance policies are covered in the event of a total loss, according to Value Penguin.

Property damage liability insurance is mandatory in all 50 states. However, to receive a payout from this type of policy, a driver must file a claim against another driver’s property damage liability policy. The other driver must have been negligent in the collision in order for the driver filing the claim to receive compensation.

With a collision policy, it does not matter which driver was at fault.

After a claim is filed with the insurer, a claims adjuster will inspect the vehicle to assess damage and make a total loss designation if one is needed.

What Is the Total Loss Threshold in Ohio? 

Many states use a Total Loss Threshold (TLT), meaning the damage to the vehicle only must exceed a percentage of the vehicle’s value in order to be considered a total loss. For example, states like Colorado and Texas have a total loss threshold of 100% – meaning that the vehicle’s damages must exceed the vehicle’s value to be declared a total loss. Other states have much lower thresholds including Oklahoma which has a total loss threshold of 60%. 

Alternatively, about half of U.S. states, including Ohio, use a Total Loss Formula (TLF), according to Value Penguin. With a TLF, if the sum of the repair cost and the vehicle’s salvage value exceeds the car’s actual cash value, it is considered a total loss.

Can You Get Paid Taxes and Fees Under Ohio Insurance Total Loss Law? 

Just as there are differences in how states determine what is considered a total loss, there are also differences in the state laws on whether sales tax is required to be reimbursed in total loss settlements.

Ohio total loss law doesn’t require auto insurance companies to pay sales tax or title and registration costs up front in total-loss settlements, according to Insure.com.

Ohio residents must submit their sales tax, title and registration costs to their insurance company within 30 days of purchasing the vehicle.

What Will Insurers Offer Under Ohio Insurance Total Loss Law?

Insurers have options when it comes to what they can offer their customers under Ohio insurance total loss law.

An insurer may offer a replacement vehicle, including all taxes, licensing fees or other fees if the insured party is able to provide documentation that they purchased a replacement vehicle within 30 days, according to Insure.com.

Alternatively, Ohio insurance total loss law allows insurance companies to offer a cash settlement based on a comparable vehicle’s actual cash value, including all applicable taxes and fees.

Insurers are only required to reimburse the sales tax on the claim amount, not on the cost of the replacement vehicle. 

What Vehicle Insurance Coverage is Required in Ohio?

Like most states, Ohio has a minimum requirement for car insurance. You must carry liability coverage with the following minimal limits:

• $25,000 for property damage in one accident
• $25,000 for bodily injury to one person
• $50,000 for bodily injury to more than one person in a single accident

Liability insurance pays for any injury or property damage caused by you in a car accident. Keep in mind these are the minimum amounts legally required. Most experts recommend you obtain a sufficient amount of liability insurance to cover your net worth in the event you end up responsible for any medical or property invoices that exceed the insurance limits. If you cause damage that exceeds your insurance limits, the other party could file suit against you for the remaining outstanding amount.

It’s also recommended that you obtain uninsured/underinsured motorist coverage in case your car is hit by a driver that disobeys the law by not having their own insurance. That way, your medical bills will be covered if the person driving the other vehicle lacks sufficient coverage. It’s important to note that about 12% of drivers in the state of Ohio are behind the wheel without any automobile insurance at all, as reported by the Insurance Research Council.

A number of factors come into play when an insurance company calculates the premium rates you will pay. Your age, credit score, education, occupation, gender, marital status, your home ZIP code and your driving record are among the data points that will be considered in configuring your premium.

Are Ohio Total Loss Law Cases Successful In Court?

After a car accident, victims should be fully compensated for what they are actually due under the law. Law firms are investigating a number of Ohio insurance companies in anticipation of more lawsuits over the question of whether taxes and fees should be paid as part of a vehicle’s actual cash value under Ohio insurance total loss law.

Individuals who have been denied the total loss payment they’re owed may be able to take legal action against their insurer through a lawsuit or class action lawsuit. Some of these suits have already been filed – including one class action lawsuit under Ohio total loss law.

A group of three women who carried Geico auto insurance saw a victory earlier this year when a judge denied the insurer’s motion to dismiss their 2019 class action lawsuit. The women each had filed a claim following their respective car accidents; each of their vehicles was declared a total loss. However, they claim Geico breached its contract when it failed to reimburse them for sales tax, license and registration fees.

Geico tried to dodge the class action lawsuit by invoking their own right to an appraisal. Under the company’s policy terms, both parties are able to demand an independent appraisal – something that the plaintiffs failed to due. According to the company, the plaintiffs also hadn’t successfully argued that Geico engaged in unlawful misconduct. However, the court denied these arguments and allowed the plaintiffs to move forward with their claims.

This is not the first time Geico has faced legal action over their total loss policies. Last year, the company agreed to pay $27 million to resolve claims from Florida drivers that the insurer failed to cover sales tax and fees involved in replacing vehicles. Under the settlement, Class Members could collect payments of nearly $80 – including $72.25 for title transfer fees, $4.10 for tag transfer fees, and $0.50 in branch fees.

In order to benefit from this deal, Class Members were required to file a valid claim form by July 21, 2020.

This Geico Total Loss Class Action Lawsuit  is Case No. 2:19-cv-02477-GCS-EPD, U.S. District Court, Southern District of Ohio Eastern Division. Counsel for the plaintiffs includes Andrew Shamis of Shamis & Gentile and Scott Edelsberg of Edelsberg Law.