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State Farm Policy Holders Get $456M

October 4, 1999

MARION, Ill. (AP) _ State Farm policyholders won damages totaling $456 million today in a lawsuit accusing the nation’s largest auto insurer of cheating customers by ordering body shops to use substandard repair parts.

Lawyers for policyholders complaining about ``aftermarket parts″ had asked for more than $5.4 billion in damages in the class-action lawsuit.

The lawsuit, which went to the jury on Wednesday, accused the State Farm Mutual Automobile Insurance Co., based in Bloomington, of breaching its contract with policyholders to restore their cars to their pre-accident condition.

Jurors decided that claim, while two consumer fraud counts accusing State Farm of deceiving customers were to be decided by Williamson County Circuit Judge John Speroni.

The lawsuit involved parts such as door panels, hoods and fenders, modeled on original parts produced by automakers but made without benefit of the original specifications. About 15 percent of all crash-repair parts used last year were aftermarket replacements, according to insurance and auto-body repair groups.

Critics claim such parts fail to provide the same fit, finish, corrosion protection and, in some cases, safety as the more expensive parts made for automakers.

Industry analysts and some consumer advocates have said a large verdict against State Farm could reduce the use of aftermarket parts in the auto-repair business and drive up the price of crash repairs.

During trial, State Farm lawyers said the use of aftermarket parts saved policyholders more than $233 million in premiums in 1998.

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