The lawsuit alleges that State Farm steers consumers to direct repair providers that have signed agreements with the insurance company. As part of the terms of the agreement, those repair shops must comply with the standards for repair laid out by State Farm. The insurance company, not the repair shop, dictates how long the repair should take, what types of repairs are made and the quality of replacement parts. In many cases, the repairs are completed with sub-standard parts without the consent of the policy holder.
“In some cases, we’ve found that these parts are nothing more than used junk yard parts. In others, we’ve found them to be foreign knock-off parts of questionable quality,” said Caldwell. “Auto repair is not an industry where you can cut corners to save a little money,” he said. “It could be a matter of life and death.”
Caldwell says the suit aims to change the culture of unsafe business practices led by State Farm in the auto insurance and repair industry. State Farm currently holds the largest share of auto insurance policies in Louisiana. In 2012, State Farm wrote one third of all auto insurance policies in the state totaling over $1 billion in premiums.
“Each month Louisiana consumers give their hard earned money to State Farm under the assumption that the insurer will take care of them if an accident occurs. This simply isn’t happening. Quite frankly, State Farm has been there for State Farm, not the Louisiana consumer,” Caldwell stated.
State Farm responded to the suit saying it does not reflect its history of advancing automotive safety. According to State Farm spokesperson Dick Luedke, answering a question by a trade media source, “The description in this lawsuit is not in line with State Farm’s mission to serve the needs of its customers, and our long, proud history of achievements in advancing vehicle safety. We are reviewing the lawsuit and will have more to share soon.”
Luedke also pointed toward a State Farm website that outlined the auto insurer’s involvement in advancing safety issues including the fact that State Farm is a Founding member of the Insurance Institute for Highway Safety.
A PDF copy of the lawsuit can be found at www.autobodynews.com.