Are ‘malus’ taxes refunded by insurance if new car is stolen?

Reader Question: I recently bought a new car in France and had to pay the malus tax. If the car was ever stolen and I had to claim on insurance would this be covered?

France’s system of additional taxes for heavy and polluting vehicles, known as the malus targets vehicles that emit CO² above certain limits or weigh above a certain threshold. 

In place for a number of years, it now has maximum payments of up to €90,000. 

The high cost of the payments and their association with new vehicles – although they can now be charged on certain second-hand vehicles – does indeed raise questions around potential financial loss in the case of a stolen or destroyed vehicle that has seen taxes paid on it. 

The bad news is that many insurance companies have not been factoring the tax as part of the vehicle’s cost when calculating compensation for a stolen or damaged vehicle that has comprehensive insurance.

The argument for this is based on article L.121 of the French insurance code that states “The compensation owed by the insurer to the insured cannot exceed the value of the insured property at the time of the loss.” 

Some insurers therefore argue that their calculations of the car’s value exclude the malus, seen as something having been added by the government on top of the market value of the car. 

Having said this, some motoring lawyers argue that this is contestable, saying that a principle of insurance contracts is that the car should be guaranteed based on the cost of replacing it, thus what the owner would have to pay to acquire a similar vehicle. 

One motoring avocat, Sébastien Dufour, argues that the insurer should refund based on the cost listed on the purchase facture (invoice) which includes the malus tax. 

Note that some contracts provide for replacement ‘as new’ (often for a set period), otherwise they would factor in the age of the vehicle and also deduct any franchise (excess) sums provided for in the contract. 

In the first instance, it would be a good idea to check your insurance contract to see if there is any explicit mention of how the malus is treated, which will resolve the issue. 

If not, we suggest asking your insurer as to its policy.

Were you to experience a theft - or an accident writing off the vehicle - and the insurer refused to reimburse the malus, if this represents a very significant sum to you, it may be worth engaging a motoring lawyer to contest this. 

Also, according to Mr Dufour, VAT paid, which is also itemised on the invoice, is usually refunded by insurers, which is another argument against the view that taxes paid to the state should not be refunded where they represent an obligatory part of the acquisition costs.