Farmers Insurance Settle Inferior-parts Suit

A settlement has been reached between Farmers Insurance Group and a nationwide class of plaintiffs who alleged that Farmers' claims adjusters directed that collision repairs be made with parts not approved by the original maker, violating the terms of its auto insurance policies.

The settlement requires Farmers to modify its claims adjustment process and make payments to customers who received unapproved parts when repairs were being made. This includes payments to customers who, between June 15, 1996, and Nov. 1, 2006, made a claim for vehicle repairs that was fulfilled with non-OEM parts.

Eligible parties will receive payments of $20 to $40 per part, depending on the portion of the car replaced. Claims must be filed by June 1, 2007.

In addition, eligible parties have full warranties on all non-OEM replacement parts for as long as they own their vehicles - if there are any problems, the parts will be replaced at no cost. The parts involved in the suit include fenders, door shells, truck beds and other sheet metal parts that were not galvanized.

Farmers also agreed to issue a bulletin to its claims personnel instructing them to specify OEM crash parts, salvage crash parts or parts that have not been decertified by the Certified Automobile Parts Association (CAPA) when they adjust claims. The insurer will also make more efforts to let customers know of their right to have inferior parts replaced.

"The impact of the litigation has been that Farmers and other insurance companies have started to take a more serious look at the quality of imitation parts they require to be put on cars," says Timothy G. Blood, lead attorney for the plaintiffs and a partner with Lerach, Coughlin, Stoia, Geller, Rudman & Robbins LLP.

According to Blood, other replacement-parts suits are ongoing, but this is the first suit to make it through the class certification process. The settlement has been preliminarily approved, with final approval expected in May 2007.

The settlement noted that Farmers did not agree with the allegations of the suit.

For more information, or to file a claim, visit www.lerachlaw.com/