State Farm Auto Insurance Lawsuit Moved To Louisiana

An auto insurance lawsuit filed by the state of Louisiana against industry giant State Farm will move back to the state’s courts in Baton Rouge. U.S. District Judge Gregory Presnell ruled that the case will move from a federal courthouse in Florida back to Louisiana. Attorney General Buddy Caldwell, who filed the auto insurance lawsuit in 2014, praised the decision to return the case to his state “where it belongs.” The suit alleged that State Farm broke Louisiana laws against establishing monopolies and enacting unfair trade practices.

Details of the Auto Insurance Lawsuit

The Louisiana auto insurance lawsuit claims that State Farm encouraged its policy holders to send their cars to “direct repair facilities” recommended by the insurance carrier. The suit alleges that State Farm benefited from the relationship between the carrier and the auto repair shops. Other allegations in the auto insurance lawsuit include that State Farm pressured repair shops to use “after-market” parts, rather than new parts direct from the manufacturers, to save money.

After-Market Parts and Auto Insurance Lawsuit

The auto insurance lawsuit brought to light the issues surrounding the use of after-market parts. The suit claims to have documentation showing that original damage estimates were almost 30 percent lower than the estimates from the direct repair facilities. Several local reports showed that State Farm pressured local auto body shops to use “junkyard” or “knock-off” parts to keep prices down. The installation and use of these parts, according to the auto insurance lawsuit, can void an automaker’s warranty and compromise the driver’s safety.

Auto Insurance Lawsuit Seeks to Topple Monopoly

A 2012 report showed that State Farm dominates the Louisiana auto insurance market. According to the report, State Farm wrote one out of every three auto insurance policies across the state. The company’s revenues in Louisiana alone topped $1 billion in premiums. The Louisiana auto insurance lawsuit alleges that the company used its market share to exercise undue influence. The allegations in the auto insurance lawsuit include that State Farm pressured auto body shops to perform repairs as quickly and inexpensively as possible.

State Farm Responds to Auto Insurance Lawsuit

The insurance giant released a statement regarding some of the allegations in the auto insurance lawsuit. The statement came in response to an interview a local TV station conducted with the owner of an auto body repair shop. The statement read in part that the company believes in “a vibrant, profitable auto collision repair industry.” The company stated that customers can choose their own repair shops and are under no obligation to choose those shops preferred by State Farm.

Source: New Orleans Times Picayune

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