Whether your insurance company will pay sales tax, title and registration fees will depend on state laws. If there are no governing laws regarding this, the insurance company's own guidelines will determine if as part of your settlement you will receive monies to cover these taxes and fees.
Some insurance companies will automatically include in their settlement amount the vehicle's actual cash value, so that you can buy a vehicle comparable to the one declared a total loss, AND the amount needed to cover sales tax, title and registration fees. Other insurance companies do not include these expenses as part of the settlement costs and others may include it if you negotiate it into the settlement amount.
If sales taxes are to be paid then normally they will only pay the amount of taxes that would cover a replacement vehicle. This means insurers will usually only reimburse you for those costs on the total loss settlement for your original vehicle, not a newer vehicle. For example, if your totaled vehicle's ACV was $6000 but you replace this totaled vehicle with a newer vehicle (instead of a like vehicle) worth $20,000 then your insurance company would usually only pay you the sales tax on the $6000 amount, not the $20,000.
Many states leave it up to the insurance company and their internal guidelines to determine if these items will be covered. Others states though have laws requiring insurance companies to pay for taxes and fees, though a number of these states have a 30-day time limit for you to request reimbursement for these costs from the time that you purchase your replacement vehicle.
According to the Illinois Department of Insurance if you can prove that you bought or leased another vehicle within 30 days of your settlement, your insurance company must reimburse you for the applicable taxes, title and transfer fees. You are reimbursed partial or fully for these expenses depending on if the value of the car you purchased was more or less than your settlement amount.
Under Ohio law, when an insurer pays a policyholder in cash for a totaled car, the insurer must also pay the sales tax if the customer buys a car with the money within 30 days. Insurers are only liable for the sales tax on the amount of the claim, not the cost of the replacement car.
The NYS Insurance Department states that New York State law does require that automobile insurers pay for sales tax as a component of the "Actual cash value" amount determined for a physical damage total loss claim to repair or replace a damaged automobile. So New York State does not require that automobile insurance companies include title costs in determining the physical damage total loss settlement to the insured.
If you want to find out if your state requires sales tax, title and registration fees to be part of your actual cash value settlement contact your state's insurance regulator. If it is required to be part of your settlement see if there is a statute of limitations on the amount of time you have to request these payments.
If your state does not require these taxes and fees to be paid as part of a total loss settlement you still can speak with the insurance adjuster working on your claim to see if you can negotiate these amounts into your settlement.
There are articles in our Insurance Tips center that are helpful when working with an insurance adjuster on your claim and negotiating a settlement.