FARMERS HIT WITH LAWSUIT OVER REPLACEMENT AUTO PARTS

Farmers Group, the Los Angeles-based p/c unit of Zurich Financial Services Group, has become the latest major US motor writer to be slapped with a lawsuit filed by policyholders for alleged authorisation of inferior replacement parts in the repair of damaged vehicles. The suit, filed in a Los Angeles county court, accuses Farmers of breach of contract for failure to adhere to policy language that calls for cars to be repaired with parts of “like kind and quality” and returned to pre-collision condition. The lawsuit is asking for the return of Farmers’ profits derived from the use of cheaper parts, and other unspecified damages. The suit echoes a similar action brought against Illinois-based State Farm two years ago. In that case, an Illinois jury ordered the company to pay its policyholders a combined $1.2bn for its alleged use of substandard auto parts. State Farm’s appeal against that verdict is still pending.