Having a car insurance company declare your vehicle a total loss after a crash might cause you to lose sleep because of the hassle. And it’s understandable if you’re concerned about how to get a new car after a total loss.

But know that as long as you have total loss car insurance, you should be able to get by following an accident.

When your car is totaled in a collision, car insurance companies are responsible for paying the actual cash value or market value of your vehicle so you can replace it with a similar one.

If you’re wondering, “Will I get a new car if mine is totaled?” Know that it’s not likely. The value probably won’t be enough to pay for a brand new version of the vehicle you just lost.

Instead, you’ll receive a payment for what your car is worth at the time of the crash, which you can use to get a replacement vehicle. If you’re set on a brand new ride, that means you might need to pay out of pocket for the difference.

However, insurers may be responsible for other costs associated with purchasing a new vehicle, such as sales tax, title and vehicle registration.

Also, buying a new car after total loss isn’t the same in every area. Thirty-four states require car insurance companies to pay the sales tax after replacing your crashed vehicle with a new or used one (see list).

However, that doesn't necessarily mean insurers in those states will offer to pay sales tax upfront. Nor does it mean insurers in states that don't require those reimbursements will refuse to pay. That's why it's important to ask your insurance company to reimburse you – even if the state in which you live does not require it.

There is often a 30-day time limit for requirement reimbursement for these costs from the time you purchase your replacement vehicle. So, it's essential to make your request quickly if you live in a state that requires auto insurance companies to reimburse you for these costs.

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.

“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,” explained 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 -- two different coverage types that pay up to the actual cash value of the car under different circumstances, explained Néstor Hugo Solari co-founder and CEO of Sigo Insurance.

For example, if you run into another vehicle or a structure and your car is totaled, you’d be covered under collision insurance. If someone or something else damages your car – maybe a fallen tree or hit-and-run driver, you’d be covered under comprehensive insurance.

In other words, you won’t be able to rely on your own liability insurance in the case of a total loss – you’ll need full comprehensive and collision coverage to ensure you’re compensated if you need to replace your vehicle.

That is, unless the other driver was at fault, in which case you can file a claim against their property damage liability insurance.

However, keep in mind that even though liability coverage is required in almost every state, not every driver follows the law. So there’s a chance you might have to fall back on your own auto insurance policy regardless of who’s at fault.

What makes a car totaled?

So, what separates normal damage from a “total loss?” It depends on the cost of repairing the damage and the value of your car.

Whenever you file a claim with your insurance company for the damage to your car, they send out a claims adjuster to assess the damage.

“If the cost to repair the vehicle is equal to or more than the actual cash value of the car, then the car is declared to be ‘totaled,’ and the insurance company will pay out the full value of the vehicle,” Solari said.

Say you’re in an accident, and the claims adjuster determines that it would cost $8,000 to repair your car back to its previous condition.

However, your vehicle is more than 10 years old at this point and has quite a few miles on it, so it’s only worth about $7,000. It wouldn’t make sense for the insurance company to spend more than the vehicle is worth to fix it, so they would consider it totaled and pay you its current value instead.

The exact threshold for calling it a total loss varies by state. In Iowa, for instance, a car is considered totaled if the damage is worth at least 50% of the car’s value. In other states, it needs to be 100%.

How to total a car?

If you think your car was totaled in a collision, the first step is to call your insurance company and evaluate the damage. The adjuster can determine whether it’s a total loss or not.

If your car is declared a total loss, a few steps need to happen next. Even if it’s still technically drivable, you can’t hop back in your car and hit the streets.

What happens when your car is totaled?

Usually, the insurance company will take the car and then notify the DMV that it’s totaled. The title will be updated to note that it’s a “salvage” vehicle, which means it’s not safe to drive until significant repairs have been made.

It also can’t be registered or insured until that happens. The insurance company will likely sell the salvaged vehicle to an auto shop or salvage yard. But the salvage title will always remain in place so that potential future buyers know its history.

Shrader said that as long as you’re adequately insured, your insurance company will send you a check for the actual cash value (ACV).

If you want to hang onto the totaled vehicle despite its salvage title, maybe for sentimental reasons, you’ll first have to find out if it’s allowed according to state laws.

If the insurance company decides you can keep it, they will send you a settlement check, minus your deductible and however much they could have sold it to a salvage yard for.

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 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 on the topic of recouping expenses after your car is totaled. Some states require car insurance companies for both first party and third party. Others only pertain to the first party. Some don't have any provisions at all.

Then there are the differences between the processes. For instance, states like Missouri and Ohio don't require car insurance companies to pay sales tax, title, and registration costs in total-loss settlements upfront.

In Ohio, you have to submit your sales tax, title, and registration costs to the insurer within 30 days after purchasing your new car. In Missouri, the insurer will give you an affidavit to fill out and file with the state's revenue department so you can forego paying the sales tax on your newly purchased vehicle.

Other states, such as Arizona, Kansas, and Minnesota, require insurers to include future sales tax as part of the total-loss settlement check. Under this circumstance, the insurer will calculate the sales tax as a percentage of the total settlement.

Then, there are states, for instance, Wisconsin is one example, where there is no official law requiring that sales tax be paid as part of a loss settlement, and yet insurers have been cited by state insurance commissions for doing so.

See the table below for details on how states govern sales tax for total loss settlements.

State laws on requiring sales tax to be paid as part of a total-loss settlement

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.

Enter a state in the search field to see the laws for that state.

StateRequired to pay sales tax as part of loss settlement?First-party claimsThird-party claims
ALABAMAYes

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.
ALASKAYes

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.
ARIZONAYesAll 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).
ARKANSASYesWhen 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).
CALIFORNIAYes

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).
COLORADOYesInsurer 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.
CONNECTICUTYesInsurer 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).
DELAWARENo 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 COLUMBIANo 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.
FLORIDAYesWhen 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).
GEORGIAYesInsurer 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.
HAWAIIYesInsurer 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).
IDAHONo 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).
ILLINOISYes

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).

INDIANAYesInsurer 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.
IOWAYesInsurer 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.
KANSASYesInsurer 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
KENTUCKYYesIf 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.
LOUISIANAInsured 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.”

MAINEYes“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.
MARYLANDYesInsurer 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.
MASSACHUSETTSInsurer 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 MoreNo applicable statute, case law, or regulation governing recovery of sales tax.
MICHIGANNo applicable statute, case law, or regulation governing recovery of sales tax.No third-party collision litigation allowed due to no fault.
MINNESOTAYesIf 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.
MISSISSIPPIYes

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.

MISSOURIUnless 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 MoreNo applicable statute, case law, or regulation governing recovery of sales tax.
MONTANANo 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.
NEBRASKAYesInsurer 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.
NEVADAYesInsurer 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 HAMPSHIRENo 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 JERSEYYesInsurer 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 MEXICONo 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 YORKYesInsurer 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 CAROLINANo applicable statute, case law, or regulation governing recovery of sales tax.No applicable statute, case law, or regulation governing recovery of sales tax.
NORTH DAKOTANo 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 Read MoreNo applicable statute, case law, or regulation governing recovery of sales tax.
OHIOYesInsurer 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.
OKLAHOMAYesIf 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.
OREGONYesNo 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).
PENNSYLVANIAYesA 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 ISLANDYesWhen 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.” Read More
SOUTH CAROLINAInsurers 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
TENNESSEEYesSales 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).
TEXASMotor 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.
UTAHYesInsurer 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
VERMONTYesInsurer 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.
VIRGINIAYesInsurer 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.
WASHINGTONYes

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 VIRGINIAYesInsurer 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.
WISCONSINNo 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. Read More.No applicable statute, case law, or regulation governing recovery of sales tax.
WYOMINGNo 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.
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Your auto insurance company vs. theirs

When buying a new car after a total loss, don't fret if your state doesn't require auto insurance companies to reimburse you for sales tax. Public policy is generally on your side anyways.

For instance, if another motorist is at fault in the crash, public policy dictates that you can collect from that person's insurer all costs you incurred directly because of the crash. That includes the costs associated with purchasing a new car after your old one is totaled.

Also, your car insurance rates should not increase if the accident was not your fault.

The situation is similar if you make a claim under your own insurance policy and your state doesn't require insurers to reimburse you for those extra costs. Most collision and comprehensive car insurance policies limit your insurer's liability to the car's actual cash value or the cost to repair or replace it.

In states that reimburse you for sales tax, insurers will reimburse you for those costs on the total loss settlement for your original vehicle, not your newer vehicle. For example, let's say you total an old Saturn and receive $5,000 from your insurer for it. If you use that money to purchase a Honda Accord for $20,000, your insurance company will pay you sales tax on the $5,000, not the $20,000.

Are you a first-party or third-party?

Drivers unfamiliar with the auto insurance claims process and getting a new car after total loss may not know the difference between first and third parties. Here's the difference.

What's considered first or third party in an insurance claim depends on who's filing the claim and who's at fault. If you're filing a claim with your own insurance company, that's a first-party claim. You should file a first-party insurance claim if you're at fault.

If you're filing a claim with another insurer, such as the other driver's insurance, then it's a third-party claim.

States with laws requiring insurance companies to pay for sales tax may or may not have regulations about third-party insurers. You can see which states with sales tax reimbursement laws also have third-party regulations on the list on this page.

Total loss car insurance settlement FAQs

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.

Refer to the steps to getting a new car after a total loss above. You may be able to get reimbursed for additional costs, such as sales tax and vehicle registration.

Does the insurance company buy you a new car?

Will I get a new car if mine is totaled? It all depends on how old your vehicle was at the time of the loss. Car insurance companies will only pay you the current market value at the time of the loss, which is typically less than the cost of a brand new version. There’s a workaround.

If you’d like the insurance company to buy you a new car, choose replacement cost instead of cash value when buying car insurance. The premiums are higher, but you can rest assured that if your car is totaled, you’ll get a new car.

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.

Are you allowed to keep the car to repair it yourself?

If you own your car outright and would like to keep it, even if the insurer has declared it totaled, you may hang on to the car to repair yourself. Keep in mind that car repairs on a totaled car can be more expensive and complex than you realize.

The vehicle’s structure may be compromised, potentially affecting the car’s safety. In addition, you may have trouble insuring a totaled car again because of the potential risks that arise from such extensive damage. Think long and hard before you keep and repair a totaled car.

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.

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.

Steps to getting a new car after a total loss

Getting a new version of your car would be difficult unless you’re willing to pay out of pocket for the difference or your auto insurance coverage includes total replacement cost.

Here’s how to buy a new car after a total loss:

  • Refer to the list above for rules on whether your state requires insurers to pay or reimburse sales tax, title, and registration costs in total-loss settlements.
  • If in doubt, ask the insurer.
  • Wait for the total loss check from the car insurance company.
  • Use the funds to purchase the new vehicle.
  • Save a copy of your bill of sale.
  • If the insurance company did not pay for your tax and registration up front, file for reimbursement as soon as possible. You typically have 30 days from when you purchase the new car to request reimbursement.