Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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January 10, 2005

Attorney General Hardy Myers today announced an innovative agreement with State Farm Mutual Insurance Company, which will result in $40 million in compensation to thousands of car, SUV, and truck owners nationwide. The Assurance of Voluntary Compliance was filed today in Marion County Circuit Court.

"This agreement reflects the unique circumstances and cooperative approach between the states Attorneys General and State Farm," Myers said. "It is unusual for a national company to own up to a problem before it is discovered by an investigation and ask for cooperation in correcting it." State Farm first contacted the states after an internal review found, in a small percentage of cases, that it was unable to confirm that it had properly titled vehicles it had taken ownership of from policyholders due to damage or theft.

Myers explained that after titling research is complete an estimated 30,000 consumers nationwide may be eligible for payments ranging from about $400 up to over $10,000, depending primarily on the current average value of their vehicle, and the number of consumers who participate in the compensation program.

"Although we do not have numbers for Oregon, the investigating states believe most payments are likely to range from $800 to $1850," Myers added.

In most states, depending on factors such as vehicle age and extent of damage, insurance companies taking ownership in such situations must obtain "branded titles," indicating the vehicles are "salvage," or "damaged." 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.

"We hope this agreement will encourage other companies to step forward when necessary, take responsibility, improve practices, and make things right for consumers," Myers said.

In addition to the $40 million for consumers, State Farm also will pay the expense for the major project of identifying the vehicles, tracing the current owners, contacting owners, taking claims from owners, and making compensation payments. In the agreement with Oregon, 48 others states and the District of Columbia, State Farm also makes assurances about how it presently conducts its practices, as well as in the future.

Oregonians, who complete claim forms and are approved, will receive a compensation payment from State Farm later this year or early 2006. Under the agreement, State Farm will work with the Oregon Motor Vehicles Department in the coming months to determine the specific vehicles, which require a branded title. The owners of those vehicles will receive a letter from Attorney General Myers with a claim form to complete and return to an independent claims administrator company already approved by the states to administer the notification and compensation program. After all claims are in, the amount each consumer will receive will be finalized and checks mailed.

The final amounts received by consumers will depend on the current value of their vehicle and how many consumers elect to participate in the payment program. 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 between $1,000 and $2,000 will receive $600; owners of vehicles worth between $5,000 and $6000 will receive $1400; owners of vehicles worth between $10,000 and $11,000 will receive $3000.

The Oregon Justice Department expects that current Oregon owners of eligible vehicles will be contacted by Fall 2005, after the identification process is completed.

State Farm also is making a payment of a total of $1 million to all the state participants for consumer education, future consumer litigation, public protection, local consumer aid funds, and attorney fees and costs.


Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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