by T » Sun Jun 21, 2009 12:05 am
I was involved in an accident in California and my vehicle was declared a total loss. I am now trying to decide whether to release my car to the insurance company or keep the salvage car myself. Many of my friends know cars and they believe that I will pocket more money if I retain the salvage vehicle and sell it myself to a junkyard or for parts. The insurance company sometimes sell the salvage car for too low (even to a supposedly highest bidder). OK, all that makes sense. The only thing that I am not sure about is the tax refund and license calculation.
The insurance company gave me this breakdown:
My net settlement if I release the car to them is:
ACV + Sales tax refund (9.25% of ACV) + DMV transfer fee + License refund - Deductible
On the other hand, my net settlement if I retain the salvage car is:
ACV - Salvage value + Sales tax refund (9.25% of (ACV - Salvage value)) + DMV transfer fee + Salvage Title - Deductible
Is that calculation correct? I see potential loss on my part if I retain the salvage car because:
- the sales tax refund will decrease (since it's now calculated against ACV - salvage value)
- license refund is not paid by the ins. company
Can anybody shed some light to this? Ins. company is pushing me to make a decision QUICK! :) Again, I live in California. Thanks!
The insurance company gave me this breakdown:
My net settlement if I release the car to them is:
ACV + Sales tax refund (9.25% of ACV) + DMV transfer fee + License refund - Deductible
On the other hand, my net settlement if I retain the salvage car is:
ACV - Salvage value + Sales tax refund (9.25% of (ACV - Salvage value)) + DMV transfer fee + Salvage Title - Deductible
Is that calculation correct? I see potential loss on my part if I retain the salvage car because:
- the sales tax refund will decrease (since it's now calculated against ACV - salvage value)
- license refund is not paid by the ins. company
Can anybody shed some light to this? Ins. company is pushing me to make a decision QUICK! :) Again, I live in California. Thanks!
Posted: Mon Jun 22, 2009 10:48 am Post Subject:
I think it's your call. If you feel that you would gain by selling the car personally to the junkyard or for parts, you may ask the insurance company to let you retain it. What needs to be evaluated in this case is whether or not you would get more than the claim check in this case.
Posted: Mon Jun 22, 2009 11:02 am Post Subject:
the sales tax refund will decrease (since it's now calculated against ACV - salvage value)
You need to double check that...in my state even if salvage is retained, the taxes are still based on the vehicles ACV...they only difference would be the difference in the salvage value..Posted: Tue Sep 15, 2009 06:46 pm Post Subject: deduct after tax is added to pre-loss value
It is not correct because many US circuits who have been posited this question have adopted the general position that the sales tax is calculated on the original amount and only afterward will the salvage amount be deducted. I know this is late but for future reference there may be no obligation for an insurance company to do this, but there is case law establishes precedent that when this question arises in a court of law then the salvage is deducted afterward. It is also important to note that state sales tax is the calculation base.
Posted: Tue Sep 15, 2009 11:02 pm Post Subject:
I have no idea what point you are trying to make?
Posted: Wed Jun 23, 2010 12:46 am Post Subject:
same thing happened to me. i read through the CA law and it appears that the insurance companies got away with this one. the sales tax from the salvage value have no logical place in the equation, but that's the way the law is written:
"f the insured chooses to retain the loss vehicle or if the third party
claimant retains the loss vehicle, the cash settlement amount shall include
the sales tax associated with the cost of a comparable automobile,
discounted by the amount of sales tax attributed to the salvage value of
the loss vehicle."
Posted: Wed Jun 23, 2010 12:59 am Post Subject:
case law establishes precedent that when this question arises in a court of law then the salvage is deducted afterward.
I don't know where you are going with this, but case law has nothing to do with it.
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