Thursday, October 23, 2008

Farmers Insurance Loses Oregon "Diminished Value" Class Action

Oregon's high court backs pickup owner over insurer

The Oregon Supreme Court on Thursday sided with an automobile policyholder who said his insurance company should pay not only for repairs, but also the loss in value his vehicle suffered as a result of an accident.

The class-action lawsuit could end up including most insurance-covered auto repairs in Oregon since 1993, said Dan Gatti, the lead plaintiff's attorney.

"It's huge," Gatti said.

The lawsuit is against Farmers Insurance, but Gatti said he has class-action cases pending against the three other big insurance companies -- Allstate, State Farm and Progressive.

Gatti said the damages against Farmers alone could top $30 million.

A Farmers representative couldn't be reached for comment.

The decision applies to insurance policies that do not explicitly exclude payment of what's called "diminished value." Gatti said no policies excluded diminished value until 2003, and most still do not.

The lead plaintiff is Jose Gonzales, whose insured pickup was involved in an accident in 1998. The repairs totaled $6,993. The insurance company paid Gonzales for the repairs minus the deductible.

Gonzales argued that the repairs did not restore his truck to its pre-accident value and said the insurance company should pay him the difference. Farmers refused. Gonzales and another motorist filed a class-action lawsuit in 1999.

A Multnomah County judge dismissed the case, agreeing with Farmers Insurance that it was not responsible for diminished value.

The Oregon Court of Appeals reinstated the lawsuit. The Supreme Court agreed, saying it was not enough simply to pay for the repairs if Gonzales' pickup was worth less as a result of the accident.

"He remains entitled to either a genuine repair of the vehicle, as we have discussed, or compensation for the diminished value of the un-repaired vehicle," the court said.


Court Entry Form

Court of Appeals Decision

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Monday, October 06, 2008

Farmers Insurance Commercial Denies Another Legitimate Claim

Good luck tomorrow Jeffrey!
From one of our readers:

--- snip --- snip ---

On 6/27/2008 I went to (Southwest Diner)fot lunch.I parked and went inside.When I came out I got in my car and began to back out of the parking stall.As I was backing a piece of steel rebar sticking out the top of the barrier caught my bumper and nearly tore it off.I did report it to (cindy Ford)the owner the next day.She in turn call her insurance agent (Geoffrey Baughman)a (Farmers agent).He told me my car would be repaired NO PROBLEM,therefore accepting and admitting LIABILITY.A few days later I get a call from (Farmers Insurance)declining the claim.They said they are not at fault because management was never told about the problem.DUH,I told you after it damaged my car.Just so happens a employee at the Diner saw everything happen.Total damage is about $1000 but you will pay me double in court on October 7,2008. - Jeffrey

Letter from Holli Todd of Farmers Insurance denying claim.

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Wednesday, October 01, 2008

Farmers Insurance Putting Firefighters Lives At Risk To Save Themselves Money?

Fire fighters unsure of insurers’ spray plan

By J.P. Crumrine, News Editor

Farmers Insurance Group has offered several Idyllwild customers an opportunity to join a pilot program it will conduct in the event a wildfire approaches the town, but federal and state firefighting officials are not enthusiastically embracing the idea. They have expressed concern that the insurance company’s gambit may ultimately put lives, especially firefighters’ lives, in jeopardy.

In a letter to several local customers, Farmers is asking their permission to apply a fire retardant (Phos-Check) on structures and nearby vegetation or landscaping. Farmers has an arrangement with Firebreak Spray Systems to treat properties within the proximity of an active wildfire.

Phos-Chek is a nontoxic, colorless fire retardant. Firebreak’s Web site claims it is “home and environmentally” friendly (

The effectiveness of the retardant is not being questioned. Fire officials are concerned about civilians entering areas where evacuation orders have been issued. Without communication between firefighters and independent retardant teams, officials are concerned about the safety of people if a fire’s status changes quickly and dramatically.

“As an incident commander, one of the more important issues is the safety of the people working for you,” stressed Dave Fiorella, San Jacinto Ranger District fire chief.

In August, the International Fire Chiefs Association (IFCA) adopted the position that homeowners must first create defensible space around their dwellings and then retrofit homes to contemporary building and safety standards. They stressed that these measures have proven to be highly effective protection during wildland fires.

“Private fire-protection resources engaged to prepare homes threatened by wildland fires must adhere to evacuation orders if and when issued,” the IFCA continued.

Mike Dietrich, San Bernardino National Forest fire chief, observed a situation this summer while he was incident commander of the Basin Fire. The fire retardant company’s vehicles look similar to fire engines and pass through roadblocks, yet they have no radio communication with the fire base station.

The professionals fear that these private resources may become trapped within the fire zone. Then firefighters must take time and effort to extract them. This puts the firefighting resources at risk, too.

“This is a major issue of accountability,” said John Hawkins, Riverside County fire chief and California Department of Forestry and Fire Protection unit chief. “People are inside a combat zone without proper training.”

There are plenty of examples of firefighters being injured or dying trying to save or extricate civilians. In 1996, a panicked civilian abandoned and locked his vehicle. The vehicle blocked an escape route, resulting in the death of three firefighters, Hawkins noted.

“While we can prevent people from entering an evacuated area, these guys drive up looking just like fire apparatus,” said Hawkins, speaking from experience at this year’s Vail Fire. “They have red lights and get through the road blocks.”

While the gel that homeowners can apply before a fire has proven to be a beneficial form of protection, it is creating a similar danger for people, Dietrich said.

“Gel is becoming a substitute for abatement and defensible space,” he said after the Basin Fire. “And residents are afraid to leave their homes.”

Gel requires water after 24 to 48 hours in the open. Dietrich has seen homeowners refuse to evacuate in front of a fire so that they can stay and refresh their gel. He has even observed elected county officials recommending the authorization to re-supply gel during a mandatory evacuation.

Farmers Insurance is not the only insurer attempting to protect its assets this way. But as its letters begin to appear in Idyllwild mailboxes, this issue has received statewide notoriety. The IAFC acted in August. Shortly, both the California Fire Chiefs and CalFire will discuss and evaluate this policy, Hawkins added.

With respect to retrofitting existing homes, Dietrich reported that San Bernardino County supervisors have revised an ordinance requiring replacing cedar shake shingles with fire-resistant shingles when a house is sold.

On the advice of local Realtors, the ordinance will not require immediate replacement but all roofs must have fire-resistant shingles by 2014.

Marge Muir, Pine Cove and local Realtor, said some Hill insurance companies, including State Farm, are requiring replacing wood shingles before escrow closes in order to obtain home insurance.

Farmers Insurance Group media staff did not return a phone call about this issue.