The award in 1999 followed a jury finding that the insurer violated the Illinois Consumer Fraud Act by deceiving policyholders and repairing damaged vehicles with inferior replacement parts and failing to advise them that original equipment manufacturer parts were not being used.

Phil Supple, a State Farm spokesman, said the company was "very pleased" with the chance to argue against what it viewed as "serious flaws in the trial court judgement."

He said the company "didn't think certification of the suit as class action was proper" and it constituted an improper application of the Illinois consumer fraud act to consumers outside the state and an improper method was used in calculating the damages.

Since the 1ower court decision in 1999 an appeals court reduced the award to $1 billion last year, however a nine percent interest charge that applies brings the award up to about $1.3 billion.

Michael B. Hyman, an attorney for the plaintiffs in Chicago said he expects that oral arguments will be heard by the high court in the spring and he welcomes an "opportunity for the Illinois Supreme Court to make clear that the insurance companies must treat their customers appropriately and comply with the requirements of their policies and the requirements of the law under which they operate."

He said the insurer violated a requirement that repairs restore a car to pre-loss condition with parts of like kind and quality. The materials at issue he said were "crash parts" on the exterior of the car.

News of the court's action was immediately hailed by the Alliance of American Insurers, based in Downers Grove, Ill. The Alliance said it was pleased with the court's action.

Lower court approval of the award "has had a chilling effect on the use of aftermarket parts throughout the country, denying the cost savings their use provides directly to insurers, and indirectly to consumers," commented Kirk Hansen, Alliance director of claims.

He said 20 years of Alliance studies "have repeatedly shown the high cost of car company parts, which on average cost 60 percent more than aftermarket auto parts of equal quality."

Ann Spragens Alliance senior vice president and general counsel, added that the Avery case demonstrates the need for reform of the class-action court system. "The class in the State Farm case should never have been certified because it consisted of policyholders from 48 states, each with its own differing laws and regulations pertaining to the use of aftermarket parts," Ms. Spragens said.