Total loss car insurance settlement

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Having your car declared a total loss after a crash can be stressful, but if you have total loss car insurance, you should be able to navigate the situation more smoothly. When a car is totaled in a collision, insurance companies are typically responsible for paying the actual cash value or market value of your vehicle, allowing you to replace it with a similar one.

However, it’s unlikely that your insurer will cover the full cost of a brand-new car. Instead, you’ll likely receive a payout based on your car’s value at the time of the accident, which may not be enough to buy a new version of the same model. You may need to cover the difference out of pocket if you want a new car. Still, insurers may be responsible for some additional costs, such as sales tax, title fees, and vehicle registration, depending on your state.

Reimbursement rules vary by location, with 34 states requiring insurance companies to pay the sales tax after replacing your totaled vehicle. However, insurers may not always offer to pay this upfront, even in those states, so it’s important to request reimbursement promptly. Be aware that there is often a 30-day window to claim these costs from the date you purchase your replacement vehicle, so acting quickly is crucial.

How to negotiate the best total loss settlement for your totaled car

When your vehicle is totaled, there are a few key strategies to help you negotiate the best total loss settlement. Start by knowing the fair market value of your car, as insurers may offer to buy your totaled vehicle. Research local prices to understand what constitutes a fair offer and what falls below market value.

Be prepared to counteroffer if the insurer’s initial offer isn’t satisfactory. Highlight your vehicle’s features and provide receipts for any recent work to strengthen your position. Always keep a written copy of any offers for your records.

Navigating the total loss settlement process can be complex, so understanding these negotiation tactics is crucial to securing the best outcome.

What is total loss car insurance?

To ensure that you can get around if your car is damaged beyond repair, it’s important to have total loss car insurance coverage. It is best to refer to your policy when trying to determine what does total loss mean in insurance terms.

“Total loss car insurance is an assurance that you are equipped with the right amount of insurance coverage to buy a new car in case your vehicle gets completely wrecked,” says Nick Schrader, an agent with Second Western Insurance Services.

This type of coverage is often referred to as full coverage, which includes comprehensive and collision insurance. These are two different coverage types that pay up to the actual cash value of the car under different circumstances, explains Néstor Hugo Solari co-founder and CEO of Sigo Insurance.

If your car is totaled in a collision, collision insurance covers the damage, while comprehensive insurance applies if the damage is caused by events like a fallen tree or a hit-and-run. Your own liability coverage won’t cover a total loss; you’ll need both comprehensive and collision coverage to receive compensation for replacing your vehicle unless another driver is at fault, in which case you can file a claim against their liability insurance.

However, even though liability coverage is mandatory in most states, not all drivers have it, so you may still need to rely on your own insurance regardless of who is at fault.

What is the total loss formula?

Another popular question is how much does insurance pay for a total car? It all depends on the total loss formula (TLF). The total loss formula (TLF) is one way that insurers use to evaluate whether a vehicle is a total loss.

Fair Market Value – Salvage Value = Total Loss Formula

QuickTake

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What is the actual cash value of my car?

You might assume that the actual cash value of your car is whatever you paid for it. Unfortunately, that’s not the case – your vehicle’s ACV is probably much lower. Why?

“This takes into account the type of car, its year, make, and model, and depreciation due to time and use,” Solari said. In other words, it’s what the car is worth right now based on everyday wear and tear, not what you originally paid for it.

How to file a total loss claim

There are a few steps you need to take during the total loss settlement process so that you may receive your payout.

When handling your total loss claim, be sure to remember these tips.

Submit claim: As soon as possible, file your total loss claim with your insurance company. We recommend that you do this within one business day if possible to simplify your claim. Most insurers allow for easy online or mobile filing, or you can call customer support to file by phone.
Schedule inspection: You will likely need to schedule a damage inspection with a professional to assess the damages. Your insurance company can recommend the right vendor for an approved inspection.
Secure your rental: Most auto insurance policies include rental car coverage. While you are between vehicles, be sure to secure a rental car so you have transportation access while you wait for your car to be repaired.
Review proposed total loss settlement: Upon review, your insurance company will propose a total loss settlement offer based on its findings. If you choose to accept, you must sign the settlement and return it to your insurer in order to receive payment.
Prepare to turn the car over: Be sure to gather your personal belongings out of the vehicle before turning it over.
Receive payment: Your insurer will be able to insure payment after you deliver both the vehicle and a signed copy of the total loss settlement.

Your insurer will provide specific instructions, as well as help you with any questions you may have.

How to get a new car after a total loss

If you need to replace your vehicle after it’s totaled, your insurance company won’t actually go out and find a replacement for you.

“You just need to file a claim, and the insurer will assess the value of your car and give you the amount to buy a new vehicle of the same value,” Schrader said.

Ultimately, though, it’s up to you how to use that money. You can put it toward a car or spend it on something else if you decide you don’t want a replacement vehicle right now.

State laws vary on whether sales tax is required for total loss settlements

State laws vary widely on recovering expenses after your car is totaled. Some states mandate reimbursement for both first-party and third-party damages, others apply only to first-party claims, and some have no provisions at all.

The process can also differ significantly. In states like Missouri and Ohio, insurers are not required to pay sales tax, title, and registration costs upfront in total-loss settlements. Ohio requires you to submit these costs within 30 days of purchasing a new car, while Missouri provides an affidavit to waive the sales tax when filing with the state’s revenue department.

In contrast, states like Arizona, Kansas, and Minnesota require insurers to include future sales tax in the total-loss settlement check, calculated as a percentage of the settlement amount. Meanwhile, in states like Wisconsin, there’s no law mandating sales tax reimbursement, but insurers have still been cited for including it by state insurance commissions.

State laws on sales tax reimbursement in total-loss settlements

Part of getting a new car after a total loss should be knowing your state’s rules on sales tax. Here are the laws pertaining to recovering sales tax as part of total loss settlements in each state. This research was compiled by the law offices of Matthiesen, Wickert & Lehrer, S.C., which operates out of Hartford, New Orleans, Austin and Los Angeles.

Below are the state laws for each state.

State	Required to pay sales tax as part of loss settlement?	First-party claims	Third-party claims
ALABAMA	Yes	When the insurance policy provides for the adjustment and settlement of first-party auto total losses based on ACV or replacement with another of like kind and quality, the insurer must pay all applicable taxes, license fees, and other fees. Ala. Admin. Code § 482-1-125-.08. Where policy provides that “If we pay for loss in money, our payment will include the applicable sales tax”, sales tax is owed. Lary v. Valiant Ins. Co., 864 So.2d 1105 (Ala. Civ. App. 2002), overruled by Ex parte S & M, LLC, 120 So.3d 509 (Ala. 2012).	No applicable statute, case law, or regulation governing recovery of sales tax.
ALASKA	Yes	No state sales tax in Alaska. When the insurance policy provides for the adjustment and settlement of first-party auto total loss based on ACV or replacement with another of like kind and quality, the insurer must offer a comparable replacement vehicle with all applicable taxes, license fees, and other fees paid. Alaska. Admin. Code § 26.080. If insured wants to retain the salvage following a total loss and seeks to settle on an ACV basis, the correct calculation for the total loss is based on the actual cost to purchase a comparable vehicle, including all applicable taxes, license fees, destination or delivery charges, and other fees incident to transfer of ownership. This calculation is not contingent on salvage, nor does calculation of ACV change if the insured seeks to keep the salvage rather than have the salvage turned over to the insurer for disposition. Bulletin 93-8, 1993 WL 13563685 (AK INS BUL), 2.	No applicable statute, case law, or regulation governing recovery of sales tax.
ARIZONA	Yes	All insurance policies must make prompt, fair, and equitable settlements applicable to both first and third-party total loss claims. This includes either (1) offering a replacement auto with all applicable “taxes, license fees, and other fees” paid, or (2) making cash settlement which includes all applicable taxes, license fees, and other fees. Ariz. Admin. Code § R20-6-801(H)(1).	Third-party insurers must follow the same rules as first-party insurers. Any deviation from those rules must be supported by documentation giving particulars of the vehicle’s condition, and all deviations must be “measurable, discernible, itemized, and specified as to dollar amount.” Ariz. Admin. Code § R20-6-801(H)(1)(C).
ARKANSAS	Yes	When the insurance policy provides for the adjustment and settlement of a first-party auto total loss, the insurer must either (1) offer a replacement auto with all applicable “taxes, license fees, and other fees” paid, or (2) make a cash settlement which includes all applicable taxes, license fees, and other fees. If the insurer deviates from the methods above, they must include an itemized list stating the amount of the claim attributable to the value of the auto and the amount attributable to the sales tax. Ark. Admin. Code § 054.00.43-10(A).	Third-party insurers must follow the same rules as first-party insurers. Any deviation from those rules must be supported by documentation giving particulars of the vehicle’s condition, and all deviations must be “measurable, discernible, and itemized as to dollar amount.” Ark. Admin. Code § 054.00.43-10(A)(3).
CALIFORNIA	Yes	Insurer must (1) offer a cash settlement based upon the actual cost of a “comparable auto” including all applicable taxes and other fees, or (2) offer a replacement comparable auto including all applicable taxes, license fees, and other fees. Cal. Code of Regs. Tit. 10 § 2695.8(B) Pro-rata refund of Vehicle License Fee (VLF) portion of the registration fees (in lieu of property tax) is required when one (1) vehicle is stolen and not recovered within 60 days after police report, Cal. Rev. and Tax. Code § 10902; (2) total loss, Cal. Veh. Code § 11515 & Cal. Rev. and Tax. Code § 10902, or (3) vehicle completely stripped or burned. When a carrier elects to repair the car to its pre-accident condition, it’s not required to pay for any loss of value to the vehicle, which can occur after a seriously damaged vehicle is fully repaired. Carson v. Mercury Ins. Co., 148 Cal. Rptr. 3d 518 (Cal. App. 2012). .	Third-party total loss claims are evaluated in the same way as first-party claims. Cal. Code of Regs. Tit. 10 § 2695.8(B)(5).
COLORADO	Yes	Insurer shall pay title fees, sales tax, and any other transfer or registration fee associated with the total loss of a motor vehicle. C.R.S. § 10-4-639.	Third-party total loss claims are evaluated in the same way as first-party total loss claims. C.R.S. § 10-4-639.
CONNECTICUT	Yes	Insurer must pay an amount equal to (A) the settlement amount on such vehicle plus, (B) whenever the insurer takes title, an amount determined by multiplying the settlement amount by the current tax rate percentage. C.G.S.A. § 38a-816.	No authority requiring payments of sales tax to third-party total loss claims. Insurers have no duty of good faith to third parties since their relationship is adversarial and not fiduciary in character. Asmus Elc., Inc. v. G.M.K. Contractors, LLC, WL 758126 (2005); Sherrick v. Belanger, 43 Conn. L. Rptr. 878 (2007).
DELAWARE		No state sales tax in Delaware. No applicable statute, case law, or regulation governing recovery of sales tax. 21 Del. C. § 2118 (A)(4) describes only the following benefits: “Compensation for damage to the insured motor vehicle, including loss of use of the motor vehicle, not to exceed the actual cash value of the vehicle at the time of the loss and $10 per day, with the maximum payment of $300, for loss of use of such vehicle.” 21 Del. C. § 2118 (A) (4). Look at policy language.	No applicable statute, case law, or regulation governing recovery of sales tax.
DISTRICT OF COLUMBIA		No applicable statute, case law, or regulation governing recovery of sales tax. However, an insured can recover damages suffered as a result of being without a vehicle for a reasonable amount of time necessary to replace or repair the damaged vehicle. Gamble v. Smith, 386 A.2d 692, 694 (1978). Look at policy language.	No applicable statute, case law, or regulation governing recovery of sales tax.
FLORIDA	Yes	When the insurance policy provides for the adjustment and settlement of first-party auto total losses based on ACV or replacement with another of like kind and quality, the insurer must pay sales tax. Any deviation from this method must be supported by documentation. The insurer must include an itemized list stating the amount of the claim attributable to the value of the auto and the amount attributable to the sales tax. F.S.A. § 626.9743.	Third-party insurers must follow the same rules as first-party insurers. Any deviation from those rules must be supported by documentation giving particulars of the auto condition, and all deviations must be “measurable, discernible, itemized and specified as to dollar amount.” F.S.A. § 626.9743(5)(C).
GEORGIA	Yes	Insurer must (1) offer a cash equivalent settlement based upon the ACV of a “comparable auto” including all applicable taxes and other fees, or (2) offer a replacement auto including all applicable taxes, license fees and other fees. Ga. Comp. R. & Regs. § 120-2-52-.06.	No applicable statute, case law, or regulation governing recovery of sales tax.
HAWAII	Yes	Insurer must (1) offer a cash settlement based upon the ACV of a “comparable auto”, if within 30 days the insured purchases a new car, the insurer must reimburse for excise tax and ownership fees, or (2) offer a replacement comparable auto including all excise taxes and ownership fees. Haw. Rev. Stat. § 431:10C-312.	No applicable statute, case law, or regulation governing recovery of sales tax. However, courts have applied various measures of damages to personal property. All these measures are merely guides to common sense aimed to ultimately fully compensate the injured party. The assessment of property damage must rest on its own facts and circumstances. Richards v. Kailua Auto Mach. Serv., 10 Haw. App. 613, 623, 880 P.2d 1233, 1238 (1994).
IDAHO		No applicable statute, case law, or regulation governing recovery of sales tax. However, Idaho Department of Insurance’s website states that an insured can recover sales tax, title fees, and release of liability fees.	No applicable statute, case law, or regulation governing recovery of sales tax. A claim against an insurer for breach of duty of good faith is only available to first-party insured parties. Idaho State Ins. Fund v. Van Tine, 132 Idaho 902, 908, 980 P.2d 566, 572 (1999).
ILLINOIS	Yes	Insurer must (1) offer a cash settlement based upon the ACV of a “comparable auto”, If within 30 days the insured buys or leases a new vehicle, the carrier must pay the applicable sales tax, transfer, and title fees in an amount equivalent to the value of the total loss vehicle, or (2) offer a replacement comparable auto including all applicable taxes, license fees, and other fees, if the insured purchases a vehicle with a market value less than the amount previously settled upon, the company must pay only the amount of sales tax actually incurred and include transfer and title fees. Ill. Admin. Code tit. 50, § 919.80(C). Exhibit A to § 919 states: “If within 30 days of a cash settlement, you can prove that you have purchased another vehicle, the company must pay the applicable sales tax, transfer and title fees in an amount equivalent to the value of the total loss vehicle. If you purchase a vehicle with a market value less than the amount previously settled upon, the company must pay you only the amount of sales tax that you actually incurred and include transfer and title fees.”	No applicable statute, case law, or regulation governing recovery of sales tax. In a third-party claim, you do not have a direct contract with the party you are seeking to recover from and their primary obligation is to their own policyholder. Read More Cramer v. Ins. Exch. Agency, 174 Ill.2d 513, 531, 675 N.E.2d 897, 906 (1996).
INDIANA	Yes	Insurer must pay sales tax in addition to the fair market value of the totaled vehicle. This is necessary for the insured to be “made whole” for the loss. Sales tax must be paid at the time of compensating the insured for the loss of the vehicle. Indiana Insurance Bulletin 82, 2/25/94. In 2014, Indiana Dept. of Ins. General Counsel Tina Korty explained that, “The Department views payment of sales tax to be a necessary component of a fair and equitable settlement.” 1/9/15 e-mail to Gary Wickert.	The Indiana Dept. of Ins. General Counsel says the position of the Department is that of Indiana Insurance Bulletin 82. Indiana law requires insurers to effectuate prompt, fair, and equitable settlement of claims. I.C. § 27-4-1-4.5. The Department views payment of sales tax to be a necessary component of a fair and equitable settlement. No case law to support, however.
IOWA	Yes	Insurer may (1) offer a replacement auto that is at least comparable including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. Iowa A.D.C. § 191-15.43(507B).	No applicable statute, case law, or regulation governing recovery of sales tax.
KANSAS	Yes	Insurer may (1) offer owner a comparable replacement vehicle, “with all applicable taxes, license fees, and other fees incident to transfer of evidence of ownership …” or (2) pay owner a cash settlement equal to the actual cost required to purchase a comparable vehicle “including all applicable taxes, license fees and other fees incident to transfer of evidence of ownership …” Sales tax is calculated by multiplying the ACV of the comparable vehicle by state and local income tax. Kan. Admin. Regs. § 40-1-34.	Kansas Insurance Department Bulletin 2013-01 states that insurers have an obligation to pay sales tax and fees for all total loss claims. Read More
KENTUCKY	Yes	If the policy provides for the settlement of first-party auto total loss, the insurer may elect to either (1) offer a replacement auto that is at least comparable including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the actual cost of a comparable vehicle including all applicable taxes, license fees, or other fees. 806 Ky. Admin. Regs. § 12:095.	806 Ky. Admin. Regs. § 12:095 defines “claimant” as a first-party claimant, a third-party claimant, or both. Bulletin 81-DM-007, 1981 states “it is necessary for sales tax to be included in establishing the value of damage when such tax is obviously an obligation of the claimant upon replacement of total losses.” However, no other applicable statute or case law.
LOUISIANA		Insured truck owner was not entitled to recover sales tax on vehicle under terms of the policy as result of his truck being stolen and/or damaged, where policy provided for “actual cash value” of the damaged property; fact that insured paid sales tax on the truck did not increase its value. Clark v. Clarendon Ins. Co., 841 So.2d 1039 (La. App. 2003).	State Farm’s insured suffered total loss to vehicle. State Farm paid insured sales tax and sought to subrogate the damages from the tortfeasor. The third party refused to reimburse State Farm for the sales tax. The Supreme Court denied State Farm’s claim, holding that, despite § 2315, below, State Farm was subrogated only to those rights its insured had, and only to the extent of first-party coverage it provided. Section 1830 says the subrogee cannot recover more than the extent of its performance under the policy. The State Farm policy did not obligate it to pay sales tax, so it could not recover sales tax from the tortfeasor. State Farm Mut. Auto. Ins. Co. v. Berthelot, 732 So.2d 1230 (La. 1999). Vehicle owner can recover sales tax. If the first-party policy requires payment of sales tax, such tax may be recovered in third-party action by subrogated insurer. Section 2315 (“Liability For Acts Causing Damages”) is known as the “fountainhead” of tort law in Louisiana, and provides in part, “Damages shall include any sales taxes paid by the owner on the repair or replacement of the property damaged.”
MAINE	Yes	“All contracts of motor vehicle casualty insurance … shall provide coverage for the value of the sales tax credit that would have been available upon trade thereof at the highest book value at the time of loss or destruction of the insured vehicle.” 24-A M.R.S.A. § 2907.	No applicable statute, case law, or regulation governing recovery of sales tax.
MARYLAND	Yes	Insurer may (1) offer a replacement auto that is substantially similar (does not address if sales tax and fees are included). Md. Code Regs. § 31.15.12.07, or (2) offer a cash settlement based on the actual cost of a substantially similar vehicle including all applicable taxes and transfer fees. Md. Code Regs. § 31.15.12.04. Insurers have been cited for refusing to reimburse sales tax on a total loss claim under Md. Code Ann., Ins. § 27-303 and § 27-304.	Insurer may only offer a cash settlement based on the actual cost of a substantially similar vehicle including all applicable taxes and transfer fees. Md. Code Regs. §§ 31.15.12.03 and 31.15.12.04. MD Ins. Order 11-25-80.
MASSACHUSETTS		Insurer is only required to pay for the ACV of a vehicle as of the day of the loss, not the cost to replace it. 211 Mass. Code Regs. § 133.05. Read More	No applicable statute, case law, or regulation governing recovery of sales tax.
MICHIGAN		No applicable statute, case law, or regulation governing recovery of sales tax.	No third-party collision litigation allowed due to no fault.
MINNESOTA	Yes	If the policy provides for the settlement of first-party auto total loss, the insurer may (1) offer a comparable and available replacement vehicle including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the actual cost of a comparable vehicle including all applicable taxes, license fees, or other fees. M.S.A. § 72A.201.	No applicable statute, case law, or regulation governing recovery of sales tax.
MISSISSIPPI	Yes	The insurer must pay sales taxes, title fees, or license fees unless the policy unambiguously excludes this recovery for total loss claims. MS Bulletin 2007-4.	Jay Evey (Mississippi Department of Insurance) states that MS Bulletin 2007-4 does extend to third parties based on public policy of making the injured party whole. No applicable statute, case law, or regulation governing recovery of sales tax.
MISSOURI		Unless stated in the policy language, an insurer is not required to reimburse for sales tax. The insured must file a request with the state to have their sales tax refunded. Read More	No applicable statute, case law, or regulation governing recovery of sales tax.
MONTANA		No state sales tax. No applicable statute, case law, or regulation governing recovery of sales tax. Mont. Code Ann. § 27-1-306 states that the insured can only recover the cash value of the vehicle immediately prior to the accident.	No applicable statute, case law, or regulation governing recovery of sales tax.
NEBRASKA	Yes	Insurer must pay sales tax to put the injured party back into the position they were in before the injury. NE Bulletin CB-49.	Third-party total loss claims are evaluated in the same way as first-party total loss claims. NE Bulletin CB-49.
NEVADA	Yes	Insurer must (1) offer a cash settlement based upon the actual cost of a “comparable auto” including all applicable taxes and other fees, or (2) offer a replacement comparable auto including all applicable taxes, license fees, and other fees. Nev. Admin. Code § 686A.680.	No applicable statute, case law, or regulation governing recovery of sales tax.
NEW HAMPSHIRE		No state sales tax. No applicable statute, case law, or regulation governing recovery of sales tax. N.H. A.D.C. Ins. § 1002.15 describes how to determine reimbursement for total loss claims but does not speak on the topic of sales tax.	No applicable statute, case law, or regulation governing recovery of sales tax.
NEW JERSEY	Yes	Insurer must (1) offer a cash settlement based upon the actual cost of a “substantially similar auto” including all applicable taxes and other fees, or (2) offer a replacement auto including all applicable taxes, license fees, and other fees. N.J. Admin. Code § 11:3-10.4.	No applicable statute, case law, or regulation governing recovery of sales tax.
NEW MEXICO		No applicable statute, case law, or regulation governing recovery of sales tax. However, New Mexico Public Regulation Commission states that after a cash settlement, the insurer must reimburse the state’s excise tax, any title fees, and any registration charges.	No applicable statute, case law, or regulation governing recovery of sales tax.
NEW YORK	Yes	Insurer is required to reimburse the insured with the ACV. This means either repairing the damaged item or replacing it with an item substantially identical including sales tax (sales tax added to the value of the auto prior to the accident before salvage value is taken). N.Y. Comp. Codes R. & Regs. tit. 11, § 216.6. An insurer is not required to include transfer or title fees. Read More	Third-party insurers must follow the same rules as first-party insurers. N.Y. Comp. Codes R. & Regs. tit. 11, § 216.0 (Standards for Prompt, Fair and Equitable Settlement of Motor Vehicle Physical Damage Claims) states that these claim practice rules apply to both first and third-party claims. On 5/1/02, the N.Y. Office of General Counsel issued a formal opinion which says that in adjusting a third-party claim for a total loss of a vehicle, the third-party insurer must comply with the requirements in N.Y. Comp. Codes R. & Regs. tit. 11, § 216.7(c)(1), (3), (4) (1999), which specifies how the insurer’s minimum offer, subject to applicable deductions, should be computed.
NORTH CAROLINA		No applicable statute, case law, or regulation governing recovery of sales tax.	No applicable statute, case law, or regulation governing recovery of sales tax.
NORTH DAKOTA		No applicable statute, case law, or regulation governing recovery of sales tax. The payment on a total loss would be the ACV less the deductible. ACV is defined as an amount equivalent to the replacement cost of lost or damaged property at the time of the loss, less depreciation. Auto Insurnace Glossary	No applicable statute, case law, or regulation governing recovery of sales tax.
OHIO	Yes	Insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees if the insured provides documentation of the purchase of a replacement auto within 30 days, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. Insurers must only reimburse sales tax for claim amount, not the replacement vehicle cost. Ohio Admin. Code 3901-1-54.	Ohio Admin. Code 3901-1-54 (C)(3) defines “Claimant” as a first-party claimant or a third-party claimant. Third-party insurers must follow the same rules as first-party insurers.
OKLAHOMA	Yes	If the policy provides for the settlement of first-party auto total loss, insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. Okla. Stat. Ann. tit. 36, § 1250.8.	No applicable statute, case law, or regulation governing recovery of sales tax.
OREGON	Yes	No state sales tax in Oregon. If the policy provides for the settlement of first-party auto total loss, insurer may (1) offer a replacement comparable vehicle including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. Or. Admin. R. § 836-080-0240.	Insurer is only required to offer a cash settlement to third-parties including all applicable taxes, license fees, or other fees. Or. Admin. R. § 836-080-0240 (14).
PENNSYLVANIA	Yes	A total loss is settled based upon the pre-loss fair market value of the damaged vehicle plus the state sales tax on the cost of a replacement vehicle. 27 Pennsylvania Bulletin 306131; Pa. Code § 62.3 (E)(4).	31 Pa. Code § 146.2 defines “claimant” as a first-party claimant, a third-party claimant, or both. However, no other applicable statute, or case law governing recovery of sales tax.
RHODE ISLAND	Yes	When the policy provides for the adjustment and settlement of first-party total losses, the Insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. R.I. Code R. § 11-5-73:8.	R.I. Code R. § 11-5-73:3 defines “claimant” as a first-party claimant, a third-party claimant, or both. “In order to fully compensate for the loss to the consumer, the insurer must include applicable sales tax in its calculation of settlement value in any total loss claim.”
SOUTH CAROLINA		Insurers are not required to reimburse for the sales tax unless the policy specifically states otherwise. Schulmeyer v. State Farm Fire & Cas. Co., 353 S.C. 491, 498, 579 S.E.2d 132, 135 (2003). No applicable statute, case law, or regulation governing recovery of sales tax.	No applicable statute, case law, or regulation governing recovery of sales tax.
SOUTH DAKOTA		“First-party claims are controlled by the relationship provided by the insurance contract, so the results depend on the policy language.” E-mail from Frank Marnell – South Dakota Department of Labor and Regulations. However, no applicable statute, case law, or regulation governing recovery of sales tax.	“Third-party claims are controlled by tort law and sales tax is generally payable on third-party total loss claims”. Email from Frank Marnell – South Dakota Department of Labor and Regulations. However, no applicable statute, case law, or regulation governing recovery of sales tax
TENNESSEE	Yes	Sales tax is payable on the value of the damaged auto at the time the loss is owed on all losses. TN Bulletin 9-1-89 (#3).	Third-party insurers must follow the same rules as first-party insurers. TN Bulletin 9-1-89 (#3).
TEXAS		Motor vehicle sale and use tax is not due when insurer takes title to vehicle because of a total loss. However, motor vehicle sale and use tax is due when the insurer purchases a replacement vehicle for the insured on a total loss claim. 34 Tex. Admin. Code § 3.62.	No applicable statute, case law, or regulation directly governing recovery of sales tax. However, in Adams v. ABC Ins. Co., 264 S.W.3d 424 (Tex. App.–Dallas 2008), the court held that the total loss settlement (which included tax and fees) was some evidence of the pre-accident fair market value of the car. Thus, a subrogated carrier has essentially two arguments. Either the taxes and fees should be considered actual damages (separate and apart from FMV of the vehicle) or they should be considered some evidence as to what the true fair market value is of the vehicle. There is no law indicating that they cannot be recovered.
UTAH	Yes	Insurer may (1) offer a replacement of like kind and quality including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the actual cost of a comparable vehicle including all applicable taxes, license fees, or other fees. Utah Admin. Code r. § R590-190.	Third-party insurers must follow the same rules as first-party insurers. Utah Admin. Code r. R590-190
VERMONT	Yes	Insurer may (1) offer a comparable motor vehicle including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the ACV of a comparable vehicle including all applicable taxes, license fees, or other fees. 4-3 Vt. Code R. § 7:8.	Third-party insurers must follow the same rules as first-party insurers. 4-3 Vt. Code R. § 7:9; VT Bulletin 58, 1982.
VIRGINIA	Yes	Insurer may (1) offer a replacement vehicle including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the actual cost of a comparable vehicle including all applicable taxes, license fees, or other fees. Insurance Order No. 11607. Insurers have been cited for not promptly reimbursing sales tax, license fees, and title fees under Va. Code Ann. § 38.2-510.	“Insurers are only required to reimburse for sales tax, title fees, and transfer fees in third-party claims if the policy so requires.” E-mail from Virginia Bureau of Insurance. However, no other applicable statute, case law, or regulation governing recovery of sales tax besides Insurance Order No. 11607. Insurers have been cited for not reimbursing sales tax to a third-party total loss claim under Va. Code Ann. § 38.2-510.
WASHINGTON	Yes	Insurer may (1) offer a comparable vehicle, including all applicable taxes, license fees, or other fees, or (2) offer cash settlement including all applicable taxes, license fees, or other fees. Wash. Admin. Code § 284-30-391. License fees, weight-based fees, and other regional fees (urban areas of King, Pierce, or Snohomish counties, an insured may be required to pay Regional Transit Authority (RTA) tax to pay for their local transit-related projects) are calculated on a pro-rata basis so that the insured is compensated for the “unused” portion of the annual taxes and fees. After the ACV, sales tax and applicable pro-rated taxes and fees are added together, the insurer deducts the salvage value from the total amount. First-party coverage under clear ACV provision does not include sales tax because replacement cost considerations apply only when the property is replaced. Holden v. Farmers Ins. Co. of Wash., 175 P.3d 601 (Wash. App. 2008). However, if ACV provision is ambiguous, policy must be read to include sales tax in calculating the FMV of damaged property, regardless of whether insured replaced the damaged property. Holden v. Farmers Ins. Co. of Wash., 239 P.3d 344 (Wash. 2010).	As part of settlement amount, include all applicable government taxes and fees that would have been incurred by the claimant if the claimant had purchased the loss vehicle immediately prior to the loss. These taxes and fees must be included in the settlement amount whether the claimant retains or subsequently transfers ownership of the loss vehicle. Wash. Admin. Code 284-30-391(4)(e). Sales tax must be dealt with by insurers “in good faith.” Wash. Office of Ins. Comm., Bulletin No. 89-3 (Apr. 5, 1989). The bulletin notes that in ACV claims, “the cost of repairing and restoring a building or other object to the condition it was in before the loss is not only material, but is the most persuasive evidence of the amount of loss for which the insurer is liable. Obviously, such costs will include sales tax.” WA Bulletin 89-3, 1989; see Holden, supra.
WEST VIRGINIA	Yes	Insurer may (1) offer a substantially similar vehicle to claimant which does not include the reimbursement of sales tax, or (2) offer cash settlement to claimant based on the minimum cash value of the vehicle including an extra 5% of the cash value as reimbursement for any excise tax imposed. W. Va. Code Ann. § 33-6-33; W. Va. Code R. § 114-14-7.	Claimant is defined as a first-party, a third-party, or both. W. Va. Code R. § 114-14-2. Third-party insurers must follow the same rules as first-party insurers.
WISCONSIN		No applicable statute, case law, or regulation governing recovery of sales tax. Insurers have been cited for not reimbursing sales tax in a total loss claim under Wis. ADC § Ins. 6.11.	No applicable statute, case law, or regulation governing recovery of sales tax.
WYOMING		No applicable statute, case law, or regulation governing recovery of sales tax.	No applicable statute, case law, or regulation governing recovery of sales tax. It is the WY Dept. of Insurance’s position that sales tax is included and is based on the appraised value of the car prior to the accident/loss, but there is no specific case law, statute, rule, or formal opinion or statement that expressly supports that position.

Methodology

These materials and other materials promulgated by Matthiesen, Wickert & Lehrer, S.C. may become outdated or superseded as time goes by. If you should have questions regarding the current applicability of any topics contained in this publication or any publications distributed by Matthiesen, Wickert & Lehrer, S.C., please contact Gary Wickert at gwickert@mwl-law.com. This publication is intended for the clients and friends of Matthiesen, Wickert & Lehrer, S.C. This information should not be construed as legal advice concerning any factual situation and representation of insurance companies andor individuals by Matthiesen, Wickert & Lehrer, S.C. on specific facts disclosed within the attorneyclient relationship. These materials should not be used in lieu thereof in any way.

How much will insurance pay for my totaled car?

The amount your insurance will pay for your totaled car all depends on several factors. During the total loss settlement process, your insurance company will likely consider these factors when determining what kind of payout you will receive.

Type of car you have
Fair market value of vehicle
Salvage value
Wear and tear
Age of vehicle

Your insurer will also consider total loss value, which is calculated by adding repair and other costs to the overall value lost, as well as rental reimbursement costs.

How are you paid for a total loss?

After you agree to your total loss claim, the insurance company will be ready to make payment. First, it will look to see who owns the car. If you are leasing or financing your vehicle, your insurer will pay that party. Otherwise, the payment comes directly to you.

How you are paid may also be dependent on where you live, with rates dictated by the total loss threshold by state.

Just be sure to buy your auto insurance first!

Frequently asked questions

Below our staff of experts provides more details on buying a new car after having a car totaled and answer common questions you may have on other issues relating to totaled vehicles.

How can you buy a new car after a total loss?

Buying a new car after total loss depends on how much you’ve been paid as a settlement. You may be able to buy a similar version of your vehicle or may have to compromise for a lower-priced model.

You may be able to get reimbursed for additional costs, such as sales tax and vehicle registration.

How fast will you get your total loss check?

How soon you get paid after an accident depends on state regulations on insurance claims and the insurance company.

Generally, once the car has been declared a total loss, you may receive a loss settlement check in just a few days. But – as with all types of settlements, the process could take longer if you disagree with the amount the insurance company is offering or if you were the third party in the accident.

Should you remove your totaled vehicle from your insurance policy?

A totaled vehicle should be removed from your insurance policy, assuming you aren’t keeping the vehicle. However, you should wait to remove it until the title or lease is no longer in your name. And if you do decide to keep the totaled vehicle, it needs to be insured once you’ve made the necessary repairs.

However, you may have a tough time finding an insurance company that will agree to cover it, as it’s difficult to determine the true value of a salvage title car, and it may be less safe to drive even with repairs.

How does a total loss affect insurance?

How your car was damaged will determine whether a total loss affects your insurance premium. Generally, if the total loss was due to an accident, your rate may go up – even if you weren’t at fault. It will depend on the particular insurance company and whether the incident is considered “chargeable.”

Should I negotiate with car insurance adjusters about a car total loss?

The estimate that a claims adjustor comes up with after evaluating your totaled car is just that – an estimate. You need to approve the ACV before accepting a payout.

In fact, it’s a good idea to do your own research by getting an estimate from a mechanic or car dealer and looking up values with Kelley Blue Book. If you think your car is worth more than what your insurance company offered, you may choose to negotiate.

If you do, it helps to have data to back up your counteroffer.

How much am I paid if my car is a total loss?

If your car is a total loss, your insurance company will offer a payout for the vehicle’s value. How much you receive depends on the results of the total loss formula, which accounts for your vehicle’s fair market value and mandatory taxes before determining your payout.

How does total loss affect insurance?

Typically, your car insurance rates increase when you have a total loss on your record. However, you can help lower costs by considering which new vehicle to buy. Some cars are significantly cheaper than others, saving you money on both the cost of the vehicle and its auto insurance.

Shop around for car insurance

If you’re not satisfied with your auto insurer, it’s probably time to review Insure.com’s annual ranking of the best auto insurance companies and see if there’s a better match for you.

When looking to change insurers, make sure to get quotes from multiple companies for the same policy. Compare possible discounts and see which company would give you the best rate while also providing you the most protection.

Lena Borrelli

Contributing Researcher

Lena Borrelli is a freelance writer from sunny Tampa Bay who has worked with such leading industry titans as Gronk Fitness, Morgan Stanley, Wells Fargo and Simon Corporation. Her work has most recently been published on sites like TIME, Microsoft News, Bankrate, Investopedia, Fiscal Tiger, The Simple Dollar, ADT and Home Advisor.

On this page

How to negotiate the best total loss settlement for your totaled car
What is total loss car insurance?
What is the total loss formula?
What is the actual cash value of my car?
How to file a total loss claim
How to get a new car after a total loss
State laws vary on whether sales tax is required for total loss settlements
State laws on sales tax reimbursement in total-loss settlements
How much will insurance pay for my totaled car?
How are you paid for a total loss?
Frequently asked questions
Shop around for car insurance

Understanding total loss car insurance settlements

How to negotiate the best total loss settlement for your totaled car

What is total loss car insurance?

What is the total loss formula?

QuickTake

What is the actual cash value of my car?

How to file a total loss claim

How to get a new car after a total loss

State laws vary on whether sales tax is required for total loss settlements

State laws on sales tax reimbursement in total-loss settlements

How much will insurance pay for my totaled car?

How are you paid for a total loss?

Frequently asked questions

How can you buy a new car after a total loss?

How fast will you get your total loss check?

Should you remove your totaled vehicle from your insurance policy?

How does a total loss affect insurance?

Should I negotiate with car insurance adjusters about a car total loss?

How much am I paid if my car is a total loss?

How does total loss affect insurance?

Shop around for car insurance

In case you missed it