State Farm Reaches Vehicle Title Accord

Thousands of automobile owners nationwide will share in a $40-million settlement with State Farm Mutual Insurance Co. over the company’s handling of titles to vehicles totaled in accidents.

About 30,000 customers nationwide may be eligible for payments ranging from $400 to $10,000, depending on the value of their vehicle. Most payments will be between $800 and $1,850, officials said Monday.

The settlement includes 49 states and the District of Columbia. Only Indiana opted out of the settlement.

The case began after State Farm approached the states and indicated that, after an internal review, it couldn’t confirm that it had properly titled vehicles whose ownership it had assumed after damage or theft, said Iowa Atty. Gen. Tom Miller.

In most states, insurance companies taking ownership of vehicles in such situations must declare on the title whether the car was “damaged” or is “salvage.” That means purchasers of the vehicle if rebuilt would know it was listed as a total loss in an accident, a fact that could affect its value, said Christine Pritchard, a spokeswoman for New York Atty. Gen. Eliot Spitzer.

State Farm’s records showed that it had properly titled about 2.4 million vehicles in recent years, but that a smaller number were not properly titled. Iowa law, for example, requires a full disclosure statement of salvage history.

State Farm Vice President Jeffrey W. Jackson said his company was serious about meeting its legal requirements: “The agreement made by State Farm and the attorneys general is the right thing to do for our policyholders and the public.”

“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,” Miller, the Iowa attorney general, said.

The company is working with state motor vehicle departments to determine who will receive compensation.