Car Accident Property Damage Tip: The Insurance Company Should Pay the Taxes on a New Car Purchase

The Car Accident Property Damage: How-to Guide is a comprehensive video series curated by Andrew Kryder, Chicago car accident attorney and the founding partner of The Kryder Law Group, LLC Accident and Injury Lawyers. The series provides actionable tips and step-by-step procedures to help people work with a car insurance company to repair a damaged car or purchase a replacement vehicle after an auto accident.

From filing an auto insurance claim to addressing property damage issues, the guide offers money-saving tips and valuable insights to enable you manage the aftermath of a non-injury car accident efficiently, effectively, and independently.

Paying Sales Tax When Replacing a Totaled Vehicle

Meet Andy Kryder. “Here’s a tip to make sure you get every dollar you deserve from the insurance company. If your car has been totaled,  make sure they pay [sales] tax on the purchase of the new vehicle.”

The Tax Obligation for a Replacement Vehicle

Andy begins, “Here’s how it works: pretend that your car was worth $10,000. You’re going to get a check from the insurance company, and then go and buy another $10,000 car. But there’s also going to be tax on that car, and the only reason you’re being assessed that tax is because their insured caused an accident and totaled your car.”

“So,” he continues, “they should be responsible for the tax on the purchase of the new car up to the amount of the value. You can’t go and buy a new $100,000 car and expect them to pay the tax on the full $100,000 but they will [pay the sales tax] on the $10,000, which was the value of your car.”

Likewise, if you take the [$10,000] and you only buy a $5,000 car, they’re not going to pay the tax on the $10,000, only on the purchase for the new $5,000 car.”

Sales Tax for a Replacement Car in a Total Loss Settlement

“Again,” Andy reminds us, the purpose of “insurance is restoring you to the position that you were in before the accident: nothing more nothing less.”

Maximizing Your Total Settlement

“Make sure you get every dollar you deserve.” Andy concludes, “The tax on the purchase of a new car can add up to thousands of dollars, so make sure you ask for it.”