State Farm Mutual Insurance Co. agreed to pay $40 million to thousands of car owners across the country Monday to settle allegations that it allowed automobiles that were totaled in crashes to be resold without noting the accident on the title.
About 30,000 consumers may be eligible for payments ranging from $400 to $10,000, depending on the value of their vehicle, New York Atty. Gen. Eliot Spitzer said.
In Kansas, there are at least 184 vehicles that could be subject to the settlement, of which 37 remain titled in Kansas, said Charlene Bailey, a spokesperson for the Kansas Insurance Department.
The department's consumer assistance representatives can help steer people through the settlement, Bailey said, and are available by calling (800) 432-2484.
In most states, insurance companies taking ownership of vehicles that are severely damaged must declare on the title whether the car is "salvage," because an accident can affect the automobile's value.
The case began after State Farm approached the states and indicated that, after an internal review, it could not confirm that it had issued accurate titles, Iowa Atty. Gen. Tom 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," Miller said.
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," he said.
Current owners eligible for compensation will be contacted by the settlement administrator by the fall, authorities said. State Farm also will pay $1 million for consumer education, attorney fees and other costs.
Miller led a team of eight attorneys general negotiating the settlement, which includes 49 states and the District of Columbia. Indiana opted out of the settlement because State Farm already had an agreement there, company spokesman Fraser Engerman said.