Totaled: Recouping sales tax


When the insurance company writes off your vehicle and declares it a total loss, it is disturbing and you prepare yourself for the hassles you are in. But don’t be so disappointed because the company should pay you the market price of the vehicle which will allow you to replace it with almost the similar one. And that is one crucial part of the deal done. But you won’t believe the next part of story. These companies also might be responsible for the expenses like sales tax and vehicle registration and title registration and they will required to make those payments.

After your crashed vehicle has been replaced with a new or used vehicle, the companies are bound by the state laws to pay for the sales tax. Yes, although the companies are bound by law, but even the cheapest auto insurance companies won’t make the sales tax payment up front or will not be interested to pay where the states do not require reimbursements. Therefore it should be in your knowledge and you should ask the insurance companies to pay you back the sales tax. One thing to remember is to act fast if you are looking for reimbursements as most of these states have a 30 day period for claiming that and require you to put in your claim before this specified period.

When your old car is damaged after the accident and it is totaled, do remember that public policy dictates that you can claim all the expenses either incurred directly or indirectly because of the accident and also all the costs associated with purchasing a new or replacement car.

You are entitled to receive the reimbursements for sales tax for the losses on your original vehicle and not the one you have decided to purchase whether it is new or old. The cost of the original vehicle will come into play. Different states have different rules and one of the law may say you to provide an affidavit and file for foregoing paying the sales tax with the state revenue department. Some states include the sales tax as a percentage of total settlement.

Also usually the policy language is often very ambiguous, therefore it is usually observed that the benefit goes to the insurance policy holder. Rationally it can be also argued in favor of the policyholder that the insurance company owes sales tax, registration and title registration costs.