Farmers Group Sued Over Replacement Parts

Farmers Group Inc. faces a lawsuit from policy owners who say the fourth-largest U.S. home and car insurer uses auto repair shops that install inferior replacement parts on damaged vehicles. The suit, filed in Los Angeles County Superior Court, says Farmers broke a contractual duty to provide replacement parts of “like kind and quality� by referring policyholders to shops that use substandard parts. In a similar suit, an Illinois state jury in 1999 ordered State Farm Mutual Automobile Insurance Co. to pay policy owners $1.2 billion for allegedly using inferior replacement parts. State Farm is appealing. The California plaintiffs, who want to change Farmers’ alleged “undisclosed internal policies and procedures,� claim the repairs did not return their vehicles to pre-collision condition. The suit seeks class-action status and disgorgement of Farmers’ profit from the practice and unspecified damages. Los Angeles-based Farmers, a unit of Zurich Financial Services, could not be reached immediately for comment.