Insurance Companies are Continuing to Misuse Powers of Attorney
- Established Practice Enhances risk of Car Title fraud
Last weekend my car was in a wreck, and it looks like it is a total loss. In talking with my insurance company, I am stunned that they are telling me that I need to execute a power of attorney to them when I hand over the vehicle and that "the bureau of motor vehicles requires it." The reason why I am stunned is that I have been through this before. More than 10 years ago, I had a vehicle totaled, and the insurance company gave me the same line. I refused to sign the power of attorney and offered to sign the title to them instead. The reason: insurance companies have engaged in systematic fraud by misusing powers of attorney to launder the title of savage vehicles. In 1998 the Indiana Attorney General brought a case against State Farm insurance alleging the company laundered the titles of thousands of vehicles. The Indiana case led to a consent decree settlement between State Farm and the attorneys general in 49 states whereby State Farm would pay millions of dollars in voluntary compliance. Various estimates suggest that State Farm improperly titled 30,000 to 50,000 vehicles.
After the hub-bub of the State Farm case, I am surprised that most states have not amended their unfair practices law to specifically say that it is an unfair practice to require a power of attorney to sign over title. The practice is clearly unfair, and if you sign over a total-loss vehicle that you have paid for outright, you should refuse to sign a power of attorney to the Insurance company. If they give you a hard time, find a consumer attorney through the National Association of Consumer Advocates at www.naca.net.
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