In a closely watched legal decision, the Oregon Supreme Court has officially reversed a $26.3 million class action judgment previously awarded against Farmers Insurance Co. of Oregon. The case serves as a pivotal reference for how insurers must communicate policyholder rights under state law—and reinforces the importance of regulatory compliance in policy communications.
Background of the Case
The original lawsuit, led by plaintiff Steven Bellshaw, alleged that a notice issued by Farmers Insurance regarding auto repair shop recommendations failed to include all legally required information. At the center of the case was Oregon’s “choice-of-shop” statute (ORS 746.290(2)), which prohibits insurers from mandating that policyholders use specific repair shops to settle an auto claim.
Oregon law mandates that adjusters clearly inform insureds of their right to choose any repair shop, and that communications must be “clear and conspicuous,” using language pre-approved by the Director of the Department of Consumer and Business Services (DCBS).
What the Law Requires
The statute requires the following two key notifications:
- Right to Choose a Repair Shop
Policyholders must be told:
“Oregon law prohibits us from requiring you to get repairs to your vehicle at a particular motor vehicle repair shop. You have the right to select the motor vehicle repair shop of your choice.” - Repair Shop Guarantee Statement (if insurer’s recommendation is accepted)
If the insured agrees to use the insurer’s suggested repair shop, they must receive the following within three business days:
“We have recommended a motor vehicle repair shop. If you agree to use our recommended repair shop, your vehicle will receive repairs returning it to a pre-loss condition relative to safety, function, and appearance at no additional cost to you other than as stated in the insurance policy or as otherwise allowed by law.”
Initial Ruling & Supreme Court Reversal
A Multnomah County Circuit Court initially ruled in favor of Bellshaw and the class members, stating that Farmers had failed to include all required details in their notice, thus violating the statute. This led to a summary judgment of $26.3 million against the insurer.
However, upon appeal, the Oregon Supreme Court reversed this decision, determining that Farmers’ use of DCBS-approved language satisfied their legal obligations—even if the exact statutory language was not replicated. The court clarified that pre-approved wording from regulators holds legal weight, even when it doesn’t mirror every specific statutory phrase.
As a result, the case has been remanded back to the circuit court for further proceedings aligned with the Supreme Court’s interpretation.
Implications for the Insurance Industry
For carriers and agencies alike, this ruling underscores the importance of regulatory alignment. Even seemingly minor deviations in policy communication can result in costly litigation—unless supported by formal approval from state regulators.
At Skyscraper Insurance, we ensure all our policyholder materials and client communications are thoroughly vetted for regulatory compliance. Whether you’re managing personal auto policies or commercial fleet coverage, transparency, accuracy, and legal integrity are central to our service approach.
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