Auto insurers must reimburse vehicle registration fees to policyholders in Colorado if their car is totaled, regardless of whether the state credits the owner independently, the Court of Appeals ruled on Thursday.

Colorado law requires that insurance companies shall pay title fees, sales taxes and any other registration fees associated with a “total loss” of a vehicle. Separately, another provision states vehicle owners may receive credit from the Division of Motor Vehicles for fees on a canceled registration when registering a new vehicle.

Barbara Trudgian had auto insurance through LM General Insurance Company and paid a registration fee for her vehicle before it was totaled in an accident. The company did not include reimbursement for the registration in its settlement with Trudgian.

LM General Insurance, an underwriter for Liberty Mutual, argued that it need not pay her for the registration until it knew what amount of credit, if any, the DMV would provide.

The appellate panel disagreed with the company’s reasoning, and ruled that there was no exception to an insurer’s responsibility to pay.

“In other words, just like a totaled vehicle is a loss to the insured, the associated registration fee is likewise a loss,” wrote Chief Judge Steve Bernard for the panel.

LM General Insurance also contended that an insured motorist might receive double payments from their insurer and the DMV’s credit. Judge Ted C. Tow III at oral argument raised the question of whether, under that logic, an insurance company could refuse to pay out at all until any legal proceedings against the person who caused the accident concluded.

“That would seem to be the same exact argument,” he said.

Holly White, the attorney for LM General Insurance, told the judges that conditionally compensating the vehicle owner is “not overly complicated. The insured would simply come forward and say, ‘here’s my title and registration fees.’ The carrier would say, ‘have you received any credit?’…If he doesn’t receive a credit, the insurance carrier would pay.”

Bernard, however, suggested that White’s client take its concerns to the legislature, as the word “shall” clearly indicated the obligation of insurers. The credit from the state, on the other hand, is not mandatory, Bernard observed in the opinion. Further, delaying an insurance payout while awaiting a decision on the credit would not comport with the law’s intent for the “expeditious handling” of claims.

Trudgian’s attorney did not dispute at oral argument that a double payment would be “improper,” but countered the insurance company had framed the issue of reimbursement as solely dependent upon the DMV’s actions, contrary to the wording of the statute.

To the company’s point that Trudgian would receive a “windfall,” or a sudden gain in the event of a double payment, Bernard declined to describe the reimbursement in those terms, writing that she “is only seeking registration fees for the period when she was unable to use her vehicle after the accident because of the total loss. She would not be in the position of needing a replacement vehicle — and paying additional registration fees — if her insured vehicle had not been a total loss.”

Attorneys for Trudgian and LM General Insurance did not immediately respond to a request for comment.

The case is Trudgian v. LM General Insurance Company.