Root Insurance Company provides auto insurance with standard form insurance policies to customers in Texas. The complaint for this class action alleges that Root, in its payouts for totaled vehicles, does not include sales tax, which the complaint alleges violates its own Texas Sales Tax Form Policies.
The class for this action is all persons who, between December 19, 2022 and the date the Motion for Class Certification is filed in this case, (1) bought an auto insurance policy from Root and were issued a Root Texas Sales Tax Form Policy, (2) suffered a total loss of the insured vehicle; and (3) received an indemnity payment from Root for the total loss that did not include sales tax.
Root’s Texas Sales Tax Form Policies are form policies it uses in Texas, the complaint alleges, that “expressly obligate Root to pay its insureds the applicable sales tax in the event of a total loss of the insured vehicle.” The applicable tax rate for this, the complaint claims, is set by the Texas Tax Code and is 6.25%.
The complaint shows an insert of a Payment of Loss section of one such policy that contains the line, “If we pay for loss in money, our payment will include the applicable sales tax for the damaged or stolen property.” A sample of such a policy, issued to Christa Taylor, the plaintiff in this case, is attached to the complaint as Exhibit 1.
Christa Taylor bought the insurance policy to cover her 2016 Honda CR-V. According to the complaint the policy is a Form 1 policy that is one of the Texas Sales Tax Form Policies requiring Root to pay sales tax on the actual cash value (ACV) of an insured vehicle that is declared a total loss.
On or around April 28, 2021, a hailstorm caused severe damage to Taylor’s Honda. Root declared the vehicle a total loss and chose to pay Taylor its ACV and take title to the damaged vehicle in return.
According to the complaint, Root offered Taylor $16,759 as the ACV, an amount that did not include sales tax. However, Taylor used the appraisal process in the policy to challenge this amount, the complaint claims, and was ultimately granted an ACV of $22,750. Root sent Taylor a check for $22,750 for the ACV, the complaint says, but did not pay anything for the sales tax.
“Under Texas law,” the complaint claims, “sales tax is not part of actual cash value.” The complaint thus contends that Root still owes Taylor 6.25% of $22,750, or $1,421.88.
The complaint suggests that Root has withheld the sales tax from “thousands of insureds” who also have the Texas Sales Tax Form Policies, and, with an average ACV claim of around $20,000, the complaint claims it failed to pay each such insured around $1,250.
Article Type: LawsuitTopic: Insurance
Most Recent Case Event
Root Insurance No Sales Tax on Payouts for Totaled Vehicles Texas Complaint
December 19, 2022
Root Insurance Company provides auto insurance with standard form insurance policies to customers in Texas. The complaint for this class action alleges that Root, in its payouts for totaled vehicles, does not include sales tax, which the complaint alleges violates its own Texas Sales Tax Form Policies.
Root Insurance No Sales Tax on Payouts for Totaled Vehicles Texas ComplaintCase Event History
Root Insurance No Sales Tax on Payouts for Totaled Vehicles Texas Complaint
December 19, 2022
Root Insurance Company provides auto insurance with standard form insurance policies to customers in Texas. The complaint for this class action alleges that Root, in its payouts for totaled vehicles, does not include sales tax, which the complaint alleges violates its own Texas Sales Tax Form Policies.
Root Insurance No Sales Tax on Payouts for Totaled Vehicles Texas Complaint