Consumers who may have unknowingly bought damaged vehicles because State Farm Insurance failed to issue proper titles for the cars will get money back as part of a national settlement.
Attorney general’s offices from 48 other states plus the District of Columbia reached an agreement with State Farm in which the insurer will give $40 million in refunds to thousands of car, SUV, and truck owners. An estimated 30,000 consumers nationwide may be eligible for payments ranging from $400 to more than $10,000, depending on the current average value of their vehicles and the number of consumers who participate.
Most consumers’ payments are likely to range from $800 to $1,850, the N.C. Attorney General’s office said. North Carolina consumers are expected to receive a proportionate share of the national settlement. The agreement is the result of an internal review by State Farm that showed that the company did not properly title some vehicles as salvaged or damaged before selling them to consumers.
In most states, including North Carolina, depending on factors such as vehicle age and extent of damage, insurance companies taking ownership of damaged or stolen vehicles from policyholders must obtain “branded titles” that declare the vehicles are “salvaged” or “damaged.” State Farm’s records showed that some vehicles it resold may not have been properly titled.
State Farm will identify the vehicles and their current owners. Owners will receive a letter from the state Attorney General’s Office by autumn of 2005 with instructions on how to claim their refunds. Consumers who complete a claim form and are approved will receive payment from State Farm later this year or in early 2006. Payments will be made to the owners of currently registered vehicles and will be based on the current average retail value of the vehicle.
For example, owners of vehicles worth $1,000 to $2,000 will receive $600; owners of vehicles worth $5,000 to $6,000 will receive $1,400; owners of vehicles worth $10,000 to $11,000 will receive $3,000. State Farm also has agreed to comply with all state laws regarding the titling of salvage motor vehicles and will pay a total of $1 million to all the state participants for consumer education efforts.