Should You Be Paid Taxes and Fees for a Total Loss Insurance Settlement?

Being in a car accident is distressing enough, and dealing with a total loss on top of that can feel overwhelming. But when your insurance company comes up with a total loss car insurance settlement amount, it’s important to pay attention to everything they’ve included and whether or not the offer is reasonable. Some insurance companies may try to withhold certain taxes and fees from your total loss settlement.

What Does a Total Loss Car Insurance Settlement Cover?

After a car accident, if the damage to the vehicle outweighs the value of the car, the vehicle may be deemed a total loss. In some cases, the cost for repair may have to surpass the car’s value to count as a total loss, but most insurers will declare a total loss if the cost of repair is between 70% and 75% of the car’s total value. Total loss thresholds vary from state to state. Some states, like Ohio, use what is called the Total Loss Formula (TLF), meaning that if the sum of the cost of repair plus the salvage value of the car is more than the car’s actual cash value, it is considered a total loss.

The value of the car, and thus the total loss car insurance settlement, is determined by the insurance company. A number of factors go into determining whether or not a vehicle will be considered a total loss. These factors include the vehicle’s year, make, model, mileage, physical wear and tear pre-accident, and damage caused by the accident.

Consumers can opt for the insurance company will often pick up and dispose of the vehicle, in return receiving the full offered settlement amount to help replace the vehicle. In some cases, the consumer can choose to retain the vehicle for repair, in which case the company would deduct the salvage value from the offered settlement.

It’s generally a good idea for consumers to do their own research into the actual cash value of their vehicle to make sure that the total loss car insurance settlement they’re offered is reasonable. This can be done using online tools and classified ads to help establish a base estimate.

Total Loss Car Insurance Taxes and Fees

Depending on the state, the total loss car insurance settlement may be required to include related taxes and fees associated with the vehicle. Taxes and fees that may have been withheld include sales tax as well as license and registration fees.

After a car accident, it’s important that you are fully compensated for what you’re actually legally due. Despite some states requiring insurance companies to include these extra fees and taxes in the settlements, some insurers may fail to reimburse consumers for these costs.

Lawsuits Filed Over Withheld Taxes and Fees

Some consumers have turned to litigation following a total loss car accident, alleging their insurer failed to compensate them for the associated taxes and fees. Insurance giant GEICO was hit with a class action lawsuit in Ohio by three women who claim the company failed to include the necessary taxes and fees in their settlement offers. The lawsuit alleges that in doing so, GEICO breached its own contract. A judge denied GEICO’s motion to dismiss the suit.

In a separate GEICO suit in Florida, a federal judge found Geico liable for unpaid fees stemming from total loss claims.

In May 2021, GEICO was hit with yet another class action lawsuit from a Kentucky driver. According to the plaintiff, GEICO “systematically and uniformly underpaid” thousands of claims by failing to reimburse drivers for fees.

A number of other class actions have been filed against a variety of insurance companies over similar claims. 

Filing a Lawsuit Over Withheld Taxes and Fees

If your insurer found your car to be a total loss sometime in the last five years, but you were not compensated for the associated taxes and fees as part of the settlement, you may be able to join a total loss taxes and fees class action lawsuit and pursue compensation.

Filing a lawsuit can be a daunting prospect, especially after the trauma of a car accident, so Top Class Actions has laid the groundwork by connecting you with an experienced attorney. Consulting an attorney can help determine if you have a claim, navigate the complexities of litigation, and maximize your potential compensation.

The Total Loss Taxes and Fees Lawsuit is Case No. 2:19-cv-02477-EAS-EPD, in the U.S. District Court for the Columbus Division of the Southern District of Ohio. The Geico Total Loss Class Action Lawsuit is Case No. 6:17-cv00891 in the U.S. District Court for the Middle District of Florida. The GEICO Car Insurance Class Action Lawsuit is Case No 2:21-cv-00060-DLB-EBA in the U.S. District Court Eastern District of Kentucky Northern Division at Covington.