Attorney General Kelly A. Ayotte said today that New Hampshire and 48 other states plus the District of Columbia have reached an innovative agreement with State Farm Mutual Insurance Company which will result in $40 million in compensation to thousands of car, SUV, and truck owners nationwide.

Attorney General Ayotte said that after the review of the status of vehicle titles is complete an estimated 30,000 consumers nationwide may be eligible for payments from State Farm Mutual. These payments will range 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. Most payments are likely to range from $800 to $1850.

A salvage vehicle is one that has been declared a total loss due to damage sustained in an accident, or one that has been recovered after having been stolen. In New Hampshire, when an insurance company takes ownership of a salvage vehicle, it must obtain a special certificate of title that identifies that vehicle as a salvage vehicle. The salvage title law is designed to provide notice to all who consider purchasing the vehicle that it has been damaged and repaired or that it was recovered after having been stolen. State Farm’s records showed that it had obtained salvage titles for approximately 2.4 million vehicles in recent years. However, it could not confirm that all vehicles for which it should have obtained salvage titles received those titles. State Farm believes the number of vehicles which fall into this category is relatively small. As a part of this program, State Farm will work with the state Department of Motor Vehicles to identify and locate those vehicles, including the New Hampshire Department of Motor Vehicles. Once the owners of these vehicles are located, State Farm will use a predetermined formula to reimburse the owners for the loss in value which the owners will realize.

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 it’s Agreement with the states, State Farm also makes assurances about how it presently conducts its practices, as well as in the future.

State Farm also is making a payment 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.

Attorney General Ayotte 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.

Attorney General Ayotte called the settlement groundbreaking. “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,” Ayotte said. “We hope this agreement will encourage other companies to step forward when necessary, take responsibility, improve practices, and make things right for consumers.”

Attorney General Ayotte said that State Farm will work with the New Hampshire Department of Motor Vehicles in the coming months to determine the specific vehicles which require a salvage title. The owners of those vehicles will receive a letter from the Consumer Protection and Antitrust Bureau of the Attorney General’s office 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.

Attorney General Ayotte said it is expected that current owners of eligible vehicles will be contacted by Fall 2005, after the identification process is completed.

For more information, please contact Assistant Attorney General David A. Rienzo of the Consumer Protection and Antitrust Bureau at (603) 271-3643.