Should Sales Tax Be Included When Calculating Insured Losses?
Chip Merlin, in his Property Insurance Coverage Law Blog, commented a few days ago about a recent case out of Washington, Holden v. Farmers Insurance of Washington, 2010 WL 3504821 (Wash. Sept. 10, 2010). The issue there was whether sales tax should be included in insurers' calculations of actual cash value and replacement cash value. In summary, the court rightly determined that sales tax should be included when determining the amount owed, even when paying actual cash value as opposed to replacement cost value.
Although sales tax is a minor issue in many claims, it can add up to a lot of money, particularly when viewed from the vantage that an insurer in Tennessee is basically saving ten percent by refusing to pay sales tax. To view Merlin's full post with a more in depth discussion of the case, click here.
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