State Farm Doles Out $40M For Title Problem
By Mark E. Ruquet
NU Online News Service, Jan. 11, 4:07 p.m. EST?State Farm Mutual Automobile Insurance Company has set aside $40 million to compensate consumers in 49 states who purchased automobiles that should have been salvaged.[@@]
In an agreement with the states and the District of Columbia, the Bloomington, Ill.-based insurer said it was taking the action after it discovered a small percentage of the ownership titles on total loss vehicles may not have been correctly branded as salvage vehicles.
The announcement was made yesterday through the offices of the state attorneys general involved in the agreement.
Phil Supple, chief of public affairs for State Farm, confirmed that the company approached the states and informed them of the problem in late 2003. The settlement could affect an estimated 30,000 to 40,000 vehicle owners throughout the country.
"We have been working on compliance, and this represents the total we have not been able to resolve," noted Mr. Supple. "Of the 2.5 million files we looked at, there are less than 4 percent we can't vouch for."
The problem, he said, stems from the different standards for designating a vehicle a total loss in each state. This incident, he said, points out the need for a uniform total loss standard, and branding of titles, to accurately indicate they are total losses.
According to the attorneys general in several states, the affected vehicle owners are to receive letters informing them of the situation. In some cases, where a vehicle was purchased at the price for a total loss, the consumer would be entitled to compensation based on the current worth of the vehicle.
According to the information released by the attorneys general, the claim payments could run from $600 to $3,000.
The agreement does not cover Indiana, which settled on its own.
The vehicles affected go back to 1997, said Mr. Supple.
Because State Farm was unable to resolve the branding of the title, it does not necessarily mean the vehicles were resold to consumers, he pointed out. In fact, he noted, there may be few vehicles that were resold, but the company won't know until the titles are tracked down.
"We are at a point where we have to find some things out," he explained.
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