For Immediate Release
Media Contact: Bob Cooper
Date: January 10, 2005
Idaho Consumers Will Benefit From Multi-State Agreement with State Farm Insurance
Idaho has joined with 48 other states and the District of Columbia in an innovative agreement with State Farm Mutual Insurance Company, Attorney General Lawrence Wasden said today. The agreement will result in $40 million in compensation to thousands of car, sport utility vehicle and truck owners nationwide.
State Farm initiated discussions after the company learned from an internal review that it could not confirm that it had properly titled vehicles in a small percentage of cases. State Farm had taken ownership of the vehicles from policyholders due to damage or theft. The insurance company then brought the matter to the attention of the attorneys general.
Wasden called the settlement groundbreaking. “It is rare that a company comes to us, discloses a problem, and presents a very viable solution to correct the problem and help consumers,” Wasden said. “I hope this agreement will encourage other companies to step forward when necessary, take responsibility, improve practices, and make things right for consumers.”
Wasden said an estimated 30,000 consumers nationwide may be eligible for payments ranging from about $400 up to over $10,000, after titling research is complete. Payment amounts will vary, depending on the current average value of their vehicle and the number of consumers who participate in the compensation program. The states believe most payments are likely to range from $800 to $1,850.
In most states, depending on factors such as vehicle age and extent of damage, insurance companies taking ownership of vehicles must obtain “branded titles,” indicating the vehicles are “salvage,” “damaged,” or similarly-named titles. State Farm’s records showed that it had properly titled approximately 2.4 million vehicles in recent years that may have required a “branded title,” but that it could not confirm whether a much smaller number may not have been properly titled. Payment will go to the current owners of vehicles that may require branded titles.
“Our cooperative effort with the state attorneys general reflects a commitment to resolve salvage titling concerns in a proactive manner, and demonstrates that State Farm is serious about meeting our responsibilities under the various state branded title laws,” State Farm Vice President and Counsel Jeffrey W. Jackson said. “The agreement made by State Farm and the attorneys general is the right thing to do for our policyholders and the public.”
State Farm also will pay the expenses for identifying the vehicles, tracing the current owners, contacting owners, taking claims from owners, and making compensation payments.
Under the agreement, State Farm will work with state motor vehicle titling departments to determine the specific vehicles that require a branded title. Current owners of those vehicles will receive a letter and a claim form from the owner’s state attorney general. After all claims are in, the amount each consumer will receive will be finalized and checks mailed.
Attorney General Wasden said he expects that current owners of eligible vehicles will be contacted by fall 2005. He added that consumers whose claims are approved will receive their compensation payment from State Farm later this year or early in 2006.
State Farm will also make a payment totaling $1 million to participating states for consumer education, future consumer litigation, public protection, local consumer aid funds, and attorney fees and costs.
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