The Oregon Supreme Court has overturned a $26.3 million class-action judgment against Farmers Insurance Co. of Oregon, finding the company met state requirements in how it notified policyholders of their rights to choose repair shops.
The case centered on Oregon’s “choice-of-shop” statute, which prohibits insurers from mandating the use of specific auto repair facilities as a condition for settling claims. The law also outlines required language insurers must provide to inform policyholders of their rights during the claims process.
Lower courts had previously ruled that Farmers failed to include all the required statutory elements in its notices, prompting the multi-million dollar award. However, the Supreme Court found Farmers fulfilled its legal obligations by using notice language approved by the Oregon Department of Consumer and Business Services (DCBS).
“When an insurer adopts language the DCBS has expressly approved, it is not liable for omitting other portions of the statute,” the court ruled, emphasizing the legislature’s intent for agency approval to suffice for compliance.
While the record shows no DCBS-approved wording existed from 1977 to 1993, a 1993 bulletin issued by the agency provided specific disclosure language. The bulletin also clarified that further approval was unnecessary if insurers used the recommended text. Farmers adopted that wording in 1994 and has continued its use since. Even after a 2007 amendment to the statute, lawmakers did not revise the disclosure requirements, and DCBS issued no new guidance.
Separately, a 2022 market conduct examination by the Oregon Division of Financial Regulation found Farmers had failed to secure required approvals for certain policy forms linked to emergency declarations. The report also cited inadequate policyholder notification regarding added benefits mandated by state law. Farmers disputed the findings, stating “policyholders received the extended benefits through the normal claims process” and that form approvals were obtained in December 2022.
Farmers Insurance Co. of Oregon currently holds an “A” (Excellent) Financial Strength Rating from AM Best.
According to BestLink, the top five auto insurers in Oregon by direct premiums written in 2023 were State Farm Group (21.7%), Progressive Insurance Group (17.85%), Berkshire Hathaway Insurance Group (10.56%), Allstate Insurance Group (8.53%) and Liberty Mutual Insurance Cos. (7.7%).
