Miller said 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. The states believe most payments are likely to range from $800
to $1850. [Click here for more information for consumers.]
Miller said the agreement resulted after State Farm approached the states
and indicated that, after an internal review, in a small percentage of
cases it was unable to confirm that it had properly titled vehicles it
had taken ownership of from policyholders due to damage or theft. Miller
led the 8-state executive committee of attorneys general who negotiated
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," "damaged," or
similarly-named titles (states use various nomenclature for such vehicles.)
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.
Miller said Iowa law requires a full disclosure statement of prior salvage
history, and that Iowans may have bought cars that should have been previously
titled and disclosed as salvage.
"This is a groundbreaking settlement," Miller said. "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. We hope this agreement
will encourage other companies to step forward when necessary, take responsibility,
improve practices, and make things right for consumers."
State Farm Vice President and Counsel Jeffrey W. Jackson added, "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. The agreement made by State Farm and
the attorneys general is the right thing to do for our policyholders and
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 "Assurance of Voluntary Compliance,"
or agreement with the states, State Farm also makes assurances about how
it presently conducts its practices, as well as in the future.
Miller said that consumers who complete a claim form 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 state departments
of motor vehicles in the coming months to determine in each state the
specific vehicles which require a branded title. The owners of those vehicles
will receive a letter from the consumer's home state Attorney General
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.
[See Par. 27 of the AVC, or Assurance
of Voluntary Compliance, for a chart with all estimated value ranges
and consumer payout amounts. Also available at www.IowaAttorneyGeneral.org
Miller said it is expected that current owners of eligible vehicles will
be contacted by Fall 2005, after the identification process is completed.
Attorneys General from 49 states plus the District of Columbia have signed
the agreement. The Assurance of Voluntary Compliance has been signed by
all states but Indiana, which is working under its own agreement with
State Farm. 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. The Executive Committee working on this matter consists
of the Attorneys General of California, Florida, Illinois, Iowa, Nebraska,
New York, South Carolina, and Texas.
More Information about the State
Farm Agreement for Owners of Used Motor Vehicles:
On January 10, 2005, Iowa Attorney General Tom Miller and other state Attorneys General entered into an agreement
with State Farm Mutual Insurance Company. The agreement concerned the fact that State Farm did not obtain salvage
titles for some vehicles which it had declared "total loss vehicles" and which it had taken ownership of through insurance
settlements. "Total loss vehicles" include vehicles damaged by collision or flooding, or "unrecovered theft" vehicles.
As part of the resolution of that matter, State Farm agreed to pay compensation to all consumers who now own vehicles
which State Farm did not title as salvage which were required to have been titled as salvage. Over the next several
months, State Farm will be working with the State Attorneys General and state motor vehicle titling departments to make
a final determination of which vehicles will be eligible for a compensation payment, and the names and addresses of the
owners of these vehicles.
It is expected that the owners of these vehicles will be identified across the United States by early July, 2005. By
September, it is expected that the owners will be mailed a claim form to complete and return to the claims administrator.
These payments will range from $400 to $20,000 depending on the average retail values of the vehicles. Only consumers
who complete and return the claim form will be eligible for a compensation payment.
Some consumers also may wish to know, now, whether at some point in the past State Farm had declared their vehicles to
be "total loss vehicles." To find out if State Farm ever took ownership of your vehicle due to a total loss auto insurance
claim, please write to the following address:
c/o Rust Consulting
P.O. Box 1751
Faribault, MN 55021-1751
Be sure to include the following in your request:
your name, mailing
address, and telephone number;
the year, make and
model of your motor vehicle; and
the 17-digit vehicle
identification number - found on your title, and often on the dashboard
or door frame of your vehicle.