Motorists across the country are getting some surprising letters from State Farm Insurance and their state attorney general's office. The letters inform them that their car is a total wreck.

About 32,000 letters have gone out this month to policyholders, telling them that State Farm had declared their vehicle a total wreck before they bought it, thinking -- in many cases -- that they were getting a great deal on a late-model car or truck in exceptionally good condition.

After declaring the vehicles totaled, State Farm then resold them as junk, but without getting the salvage title required by law. A salvage title is intended to warn buyers that a vehicle has been rebuilt after a major accident and that it may be unsafe.

That's what happened to Missouri motorist Sarah Smith, whose experience was profiled in a St. Louis Post-Dispatch story by Michael D. Sorkin.

"I'm getting a great vehicle," she thought. It was a used black Jeep Grand Cherokee that the salesman had described as a trade-in on a new model. The car looked solid and, most importantly for Smith, appeared safe to drive with her baby, now 18 months old.

But then Smith opened a letter signed by Missouri Attorney General Jay Nixon, disclosing that her Jeep had in fact been wrecked before she bought it.

Nixon has set up a database on his Web site, identifying about 265 previously damaged vehicles that were improperly titled in Missouri and that are covered by a settlement with State Farm and 49 states.

The information includes the vehicle identification number (VIN), make, model and year of each of the vehicles. Nixon and 48 other state attorneys general reached an agreement with State Farm earlier this year over the companys failure to make certain the vehicles were properly titled.

State Farm is paying $40 million to the consumers who currently own the vehicles. The final amounts received by consumers will depend on the current value of their vehicle and how many consumers elect to participate in the payment program.

Nixon said the settlement does not preclude those consumers from rejecting the State Farm offer and seeking their own legal recourse, nor does it affect the legal rights of previous owners of the vehicles.

The letters say State Farm will pay a sum to each vehicle owner who signs a settlement offer agreeing not to sue the insurer. The amounts range from $400 to $20,000 and are based on the current value of the vehicles.

Smith hasn't driven her Jeep since the letter arrived Sept. 17, Sorkin reported. She said she was horrified and outraged that State Farm had seemingly put her family at risk. She had the same thoughts about the attorneys general, who brokered the deal with State Farm in private.

Smith called State Farm to ask what kind of damage her car had sustained and was floored when the company said it wouldn't release any information about her car's damage, saying it had to protect the "privacy" of the car's previous owner.

Smith asked State Farm to pay the cost of having her car inspected. It refused.

"We feel the compensation we're offering should cover that," State Farm spokesman Phil Supple told the Post-Dispatch.

State Farm's letter offers Smith $2,700. She can't accept even if she wanted to, she said. That would leave her with a car she is afraid to drive and $11,000 she still owes in car payments. For now, she's driving a relative's car - and paying off that car loan along with her own.

"They're trying to pay me pennies on the dollar, and they're not even talking about safety," Smith said.

Nixon has said that he had no part in crafting the agreement between State Farm and 49 state attorneys general, which was primarily brokered by an assistant to Attorney General Tom Miller of Iowa. Miller's office has defended the settlement because consumers won't have to sue.

In an interview with the Post-Dispatch, Nixon said he plans to write a follow-up letter to each of the 265 Missourians. He said he will "clarify that they have a choice" not to sign. Not signing, Nixon added, means consumers have other "legitimate legal options to get adequate and appropriate compensation for this now obvious problem."

"It is important for these folks to understand that this (settlement) is an option," Nixon added, "and they should be careful because it can and will limit their compensation." State Farm is giving consumers until Nov. 18 to sign the settlement. The insurer says those who sign will get checks early in January.

In Illinois, where State Farm is headquartered, a spokeswoman for Attorney General Lisa Madigan said, "We believe the settlement will benefit consumers." Spokeswoman Melissa Merz added: "We urge them to consider it and consult with a private attorney."

Consumer groups are upset over how long State Farm and the attorneys general have taken to notify motorists that they are driving cars the insurer had sold as total wrecks. State Farm has said it told the Iowa attorney general's office nearly two years ago - in November 2003.

Only current owners are included in the reimbursements. Anyone who bought the vehicles, had trouble with them and resold or junked them is not eligible for the settlement, according to the company.

In their statement in January, the attorneys general praised State Farm for coming forward and acknowledging it had been reselling rebuilt vehicles. The officials also praised the company for agreeing to pay the vehicle owners.

State Farm agreed to pay the attorneys general a total of $1 million for the time they spent on the case. The attorneys general agreed not to take any legal action against State Farm. The matter never went to court.

State Farm says its offer of compensation is "fair and reasonable." In its settlement offer, State Farm acknowledges reselling total wrecks from 1997 through 2002. Although selling wrecks without salvage titles violates the law in all states but one, the letter to vehicle owners avoids saying that State Farm did anything wrong.

Perhaps most telling, the letters sent to owners of the wrecked vehicles caution them not to resell their vehicles without telling new owners about the damage, warning: "Any attempt to resell such a vehicle without disclosing this information could be a violation of law."