When you file an insurance claim after a theft, it's always a good idea to include sales taxes when listing the value of the stolen items. Many if not most insurance policies cover sales taxes, but you may miss out if you don't claim them. Whether or not you actually get reimbursement for the amount depends on several factors, including your policy language, your state's insurance laws and whether you replace the stolen items or keep the money.
Replacement Cost Policies
If your insurance policy promises to cover the full replacement cost of stolen items, sales taxes are almost always included in your coverage. Some insurance companies pay the full replacement costs upfront, including sales taxes. Others, however, pay only part of the replacement costs upfront, and then pay the rest, including sales taxes, after you purchase the replacement items within a certain time period.
Actual Cash Value Policies
Most homeowner and auto policies cover only the actual cash value of stolen property instead of replacement costs. The method for determining the actual cash value can vary by policy and by state. The most common method is to determine the replacement cost, and then subtract a percentage for depreciation to arrive at the cash value. If sales taxes are included in the replacement costs, the actual cash value will be higher.
Work With Your Adjuster
When the insurance adjuster places a value on your claim, find out if sales taxes were included in his figures. If not, you may be able to negotiate a higher settlement. This also applies when you decide to keep the money offered under a replacement cost policy -- ask that the sales taxes be included in the cash settlement amount instead of being paid only if your purchase new items.
Most states have some type of law requiring that sales taxes be considered when calculating actual cash values or replacement costs, but the laws usually apply only to auto insurance. State courts also vary in their interpretations of how actual cash value should be computed and whether sales taxes must be included, but in most cases, it depends on specific language and definitions in your policy.
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