Was your insurance total loss payout lower than expected?

If you’re paying for comprehensive or collision coverage as part of your car insurance policy, you assume that you’ll be covered by that insurance for any damages incurred as a result of a total loss.

However, insurance companies may sometimes fail to cover a policyholder’s sales tax, title transfer fees, registration fees or other fees that were supposed to be included according to the contract. Or, they may simply undervalue your vehicle. Either of these situations can result in a significantly lower insurance total loss payout than you may have expected.

If the terms of your policy state that the insurance company will reimburse you for the full value of your vehicle if it’s totaled, they may be in breach of contract for failure to do so. Depending on your state, an insurance company might also be violating the law if it doesn’t cover the taxes or fees it’s supposed to in your payout.

When is a vehicle a total loss?

A vehicle may be considered a total loss if it can’t be repaired safely or the amount that the repairs will cost exceed the car’s value. Some states have their own thresholds that determine total loss by the amount of damages in proportion to the vehicle’s value. Others follow the total loss formula. This means that if the cost of repairing the car, plus the salvage value, are more than the actual cash value of the vehicle, it may be determined a total loss.

What do insurance companies cover in the event of a total loss?

If your car is a total loss, the insurance total loss payout should cover what the actual cash value of the vehicle was at the moment before the accident. An independent appraiser typically determines this amount. Things they may take into consideration include the mileage, condition and wear and tear on the vehicle, and compare the vehicle with comparable ones in the same geographic area, according to Investopedia.

Many states also require that sales tax, title fees and registration fees for first-party claims are covered by the insurance company — either as payments upfront or reimbursement. Even if not required by state law, an insurance companies’ contract with its policyholder may specify that such costs will be covered.

What can you do if your insurance total loss payout was lower than expected?

Your insurance total loss payout may have been lower than expected if the insurance company’s appraisal is inaccurate or you believe your car may have been undervalued.

Additionally, if your payout should have included sales tax, registration fees, and title transfer fees, you might be owed money, depending on your state’s laws or the terms of your insurance policy.

There have been several class action lawsuits filed in recent years by consumers who allege that their insurance companies did not cover all the costs of their total loss claims.

Geico, Liberty Mutual, USAA, and Allstate are just a few car insurance companies that have recently faced lawsuits initiated by consumers who claim they didn’t get the payout they deserved as a result of the insurance company’s failure to include sales tax and all applicable fees.

Additionally, if you think the insurance company undervalued your vehicle, you should consider getting an estimate or appraisal from another source, or check the Kelley Blue Book to see what it lists as the market value. In some cases, you might be able to negotiate with the insurance company to obtain a higher payout.

However, negotiations to get the payout to which you’re entitled may be unsuccessful. The insurance company may also refuse to include any taxes or fees required by law — or your contract.

In these cases, it may be necessary to hire an attorney for your insurance total loss payout claim or join a class action lawsuit to obtain the payout to which you’re rightfully entitled.

A growing number of people are coming forward with lawsuits regarding their undervalued total loss vehicles. Filing a lawsuit can be a daunting prospect, so Top Class Actions has laid the groundwork for you by connecting you with an experienced attorney. Consulting an attorney can help you determine if you have a claim, navigate the complexities of litigation and maximize your potential compensation.