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Elephant Auto Insurance Sales Tax and Transfer Fees for Total Losses Class Action

When an insurance company pays the replacement cost of a vehicle that is a total loss, should that amount include sales tax and title/tag transfer fees? The complaint for this class action says yes, and it alleges that Elephant Insurance Company owes these amounts to its insureds who have had total losses. 

The class for this action is all insureds, under any Texas policy issued by Elephant or its subsidiaries, with the same policy language covering a vehicle with private-passenger auto physical damage coverage, who made a first-party claim for total loss, between March 8, 2015 to the date of class certification in this case, where the vehicle was a total loss and the claim was adjusted as a total loss.

A vehicle’s actual cash value (ACV) is normally defined as the replacement cost less depreciation. Because part of the cost of replacing a vehicle is the sales tax and the cost of transferring the vehicles title and tags, the complaint alleges that auto insurance policies should be paying these amounts. 

In this case, one of the plaintiffs, Jessica Singleton owned a 2007 Toyota Camry LE which was insured by Elephant. Singleton had an accident in 2016, after which the Camry was declared to be a total loss. 

Elephant determined that the base value of the car was $6,509 and then decided on an adjusted vehicle value of $4,885. These values were calculated by a third-party vendor that the complaint identifies as CCC. CCC looked at the cost of purchasing similar vehicles in similar condition and with similar mileage. It did not include any amounts for sales tax or transfer fees in its report. The complaint says this is a breach of Singleton’s insurance policy. 

The other plaintiff, Tony Cooper, owned a 2003 Lexus LS 430 which was insured by Elephant. In 2017, Cooper had an accident, and the Lexus was declared a total loss. The base value was said to be $7.080, and the adjusted vehicle value was determined to be $7,181.29. The base value was again calculated by CCC, and the company made no mention of sales taxes or transfer fees. Again, the complaint calls this a breach of Cooper’s insurance policy. 

The complaint sets out a number of figures: “The average total-loss claim vehicle value during the relevant time period is approximately $20,000.” With the Texas state sales tax at 6.25%, without figuring in additional local sales taxes of 0-2%, even a cheaper vehicle value of $15,000 would cost the buyer over $900 in sales tax. The mandatory minimum title transfer fee is $33 and the minimum tag transfer fee is $2.50. Added together, these represent significant losses.

Elephant’s insurance policy, the complaint claims, “unambiguously provides coverage for sales tax and mandatory transfer fees as elements of the promised ACV payment…”

The complaint claims breach of contract and violation of the prompt payment of claims statute.

Article Type: Lawsuit
Topic: Consumer

Most Recent Case Event

Elephant Auto Insurance Sales Tax and Transfer Fees for Total Losses Complaint

March 11, 2019

When an insurance company pays the replacement cost of a vehicle that is a total loss, should that amount include sales tax and title/tag transfer fees? The complaint for this class action says yes, and it alleges that Elephant Insurance Company owes these amounts to its insureds who have had total losses. 

elephant_auto_ins_acv_compl.pdf

Case Event History

Elephant Auto Insurance Sales Tax and Transfer Fees for Total Losses Complaint

March 11, 2019

When an insurance company pays the replacement cost of a vehicle that is a total loss, should that amount include sales tax and title/tag transfer fees? The complaint for this class action says yes, and it alleges that Elephant Insurance Company owes these amounts to its insureds who have had total losses. 

elephant_auto_ins_acv_compl.pdf
Tags: Actual Cash Value, Auto Insurance, Denial of Benefits, Insurance