Car Insurance Settlement - Are They Taxable?

What is an Insurance Settlement?

An insurance settlement is a sum of money paid by the insurance company either to the insured person or to the third-party injured by the insured party.

In the case of payments to third parties, the insurance company contacts the hospital to know the exact sum to be paid by the company.

Furthermore, if at the time of the accident, the insured person had been covered by the insurance provided by the insurance company, the actual cost to be borne by the person injured will be paid in full.

What am I entitled to?

The matter of what you are entitled to will depend on the ambit of loss and other factors. Factors such as driver error, poor condition of the car, etc. have a negative effect on the sum you will receive.

Apart from this, there are ways of knowing how much money you will receive. You can either get in touch with the company or make use of an insurance calculator to find the best answers.

Related Articles:

Road Tax & Rates for Second Hand Cars

When You Get A Car Tax Refund

How long does it take to process the Insurance amount?

The time taken to process the payment or the insured sum depends on the nature of the accident. If the case is straightforward and you were not at fault, then your payments should be processed as soon as in two weeks.

However, in case of the driver driving off, or in cases where you were at fault, or the details of the accident are hazy, the time taken to process such claims could go up to 3 months.

Will I have to pay anything?

Apart from the premiums of your insurance policy, you do not have to pay anything. However, in the case of your expenses being more than what your insurance plan covers is going to be a cost that you bear.

Remember that only the amount of insurance plan that you have will be covered by the insurance company, nothing more than that unless specified in your insurance policy.

What happens if your Car is stolen?

In case of theft, you can wait for the insurance company to determine how much money the company will bear. Apart from this, the entire procedure may take about a month.

Are Insurance Settlements Taxable?

There is a simple rule when it comes to taxing insurance settlements. Your settlement will be taxed only, and only if, your car gets repairs and such repairs boost the value of your car. Other than this, there is no tax liability on the insurance settlements.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.