Collision and comprehensive automobile insurance are two common types of coverages that protect you when your vehicle is damaged either in a collision or by non-collision events (such as theft or vandalism). When an insured vehicle suffers damage and the estimated cost of repairing the vehicle exceeds its "actual cash value", the insurance company will typically not pay for the repairs, but instead will declare the damaged vehicle a "total loss" and pay the policyholder the lesser amount to simply replace it. We believe that a number of automobile insurance companies have been shortchanging policyholders when paying automobile damage claims in the situation of a total loss. This is a significant issue as approximately 15% of all auto accidents are reported to result in a total loss.
Calculation of "Actual Cash Value" by Insurance Companies
The "actual cash value" owed under most policyholders' collision and comprehensive coverage is the amount it would cost the policyholder to buy a replacement vehicle that is comparable to the destroyed vehicle. It has come to our attention that some automobile insurance companies are systematically failing to include mandatory state sales taxes and title transfer fee amounts when making these actual cash value payments to their policyholders, even though these expenses are a component of the cost required to buy a replacement vehicle.
How to Fight a Total Loss Valuation
The practice of failing to pay sales tax and title fees is both illegal and wrong. Besides violating policyholders' automobile insurance contracts expressly entitling them to full payment of the actual cash value of a total loss vehicle, many states affirmatively require automobile insurers to pay sales tax and title transfer fee amounts when settling total loss claims. These two items are a necessary component of the cost to buy or lease a replacement vehicle (whether it is new or used). Not paying sales tax and title transfer fees can subject an insured to serious financial burden. Losing any of this insurer owed money can complicate efforts by the insured to buy or lease an automobile to replace the one the insurer determined was a "total loss" that could not be repaired.
If you are a policyholder whose insured vehicle was declared a total loss and were paid by your insurance company for that loss in the last 2 years, please contact us by calling 215-867-2399 or completing the form below to discuss your legal rights.