34 Tex. Admin. Code § 3.62 - Insurance Settlements

The motor vehicle sales and use tax is not due where an insurance company takes title to a motor vehicle as a result of a total loss settlement or a stolen vehicle which was later recovered, because the transaction in which an insurance company obtains title to a motor vehicle in return for an insurance settlement is not considered a sale. The motor vehicle sales and use tax is due when the insurance company purchases a replacement motor vehicle for the insured on a total loss or stolen vehicle claim.