Farmers Group Sued Over Replacement Parts

Farmers Group Inc. faces a lawsuit from policy owners who say the fourth-largest U.S. home and car insurer uses auto repair shops that install inferior replacement parts on damaged vehicles. The suit, filed in Los Angeles County Superior Court, says Farmers broke a contractual duty to provide replacement parts of “like kind and quality” by referring policyholders to shops that use substandard parts. In a similar suit, an Illinois state jury in 1999 ordered State Farm Mutual Automobile Insurance Co. to pay policy owners $1.2 billion for allegedly using inferior replacement parts. State Farm is appealing. The California plaintiffs, who want to change Farmers’ alleged “undisclosed internal policies and procedures,” claim the repairs did not return their vehicles to pre-collision condition. The suit seeks class-action status and disgorgement of Farmers’ profit from the practice and unspecified damages. Los Angeles-based Farmers, a unit of Zurich Financial Services, could not be reached immediately for comment.