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ALBANY, N.Y. (AP) -- State Farm Mutual Insurance Co. agreed to pay $40 million to thousands of car owners around 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, said New York Attorney General Eliot Spitzer.
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, said Iowa Attorney General Tom Miller.
"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 in a statement.
State Farm Vice President Jeffrey W. Jackson said his company is 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 their home state attorney general by the fall, Spitzer said.
State Farm will also 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.
(Copyright 2005 by The Associated Press. All Rights Reserved.)