When a Toyota car wrecks from the sudden acceleration issues that prompted the recent 8 million Toyota recall, the money shelled out to fix whatever damage that is inflicted as the driver tries to stop their surging speeding vehicle is generally paid out by insurance companies. If there is one thing you need to know about insurance companies it is this: they hate it when their customers actually use the service they are offering.
So as you can imagine the largest of the insurers, State Farm, armed with stacks of reports of accidents for which they’ve already paid claims, has asked Toyota to repay them for any crashes related to sudden acceleration by its vehicles.
This is just one of the problems stacking like bricks on an already over-laden wooden wheel barrow ready to shatter. There are mounting lawsuits and now claims of fraud in the way they handled the recall and the “Toyota game plan” when dealing with the National Highway Traffic Safety Administration (NHTSA) who just levied the largest fine in their history against a car company, $16.4 million.
The fine was levied on April 5th. Toyota has not yet paid it and is still in the process of saying whether they will or appeal the decision.
Domino Effect
The giant insurance companies are expected to follow with demands for repayment of claims of their own. In a term called “subrogation” (a fancy way of saying substitute) in the insurance business, these claims could end up costing Toyota from $20 million to $30 million, says Mark Bunim, an attorney with Case Closure, a mediation firm.
State Farm eluded to the fact that this could even mean that some customers could see a check for their deductible back in their account.
“If we didn’t incur any risk, we get our part back and you get your part back,” says Dick Luedke, a spokesman for State Farm.
Of course, knowing the insurance industry, it could cost a lot in administrative fees, probably coming to the exact total of your deductable. Oh well.
This isn’t the first time State Farm has gone after Toyota over this issue. In September of 2007 State Farm sent a letter to Toyota asking it to pay for claims in an accident involving a 2005 Toyota Camry. State Farm wrote, “We are aware of several complaints to your company of sudden acceleration involving the Toyota Camry.” The driver had reported the same problem to her mechanic twice before.
The document was also submitted to the NHTSA, which replied by saying it had looked into similar complaints, starting in August 2006, and closed the investigation on April 3, 2007. After closing the investigation the NHTSA informed Toyota that they believed it was an issue with the floor mats. Toyota responded with a limited recall of floor mats. State Farm wasn’t reimbursed.
This has left State Farm with a very bitter taste in their collective mouths. This taste could be passed on to the consumer.
Despite recent troubles, Toyota’s vehicles don’t cost much to insure because they are generally safe and reliable, says Peter Moraga, spokesman for the Insurance Information Network of California.
“That could change if the problems drag on,” he says. “That’s when we would see an impact on insurance rates,” he says. “It really depends on what Toyota does in terms of fixing the problem.”
Toyota spokesman Brian Lyons says subrogation claims are common between insurers and automakers. Beyond that, Toyota had no comment, leaving us to gasp deeply in surprise that it’s the Toyota buyer and insurance customer that is going to ultimately take the monetary brunt of this fiasco.
Toyota Aids the Lawsuits against Them
The House Energy and Commerce Committee and its oversight subcommittee received 70,000 pages Toyota was forced to provide the National Highway Traffic Safety Administration for its examination of the recalls. Investigators spent most of last week reviewing the documents. The NHTSA briefed the House Energy and Commerce Committee on its investigation into Toyota on today.
In the NHTSA brief they informed the committee that auto manufacturers are legally obligated to notify the NHTSA within five business days if they determine that a safety defect exists. According to NHTSA Toyota knew of the problems in September 2009 and took four months to inform them.
The documents were damning. Especially one particular email sent from Irving A. Miller, then a group vice president for Toyota Motor Sales U.S.A., to another Toyota staff member.
“I hate to break this to you,” a Toyota executive wrote, “but we have a tendency for mechanical failure in accelerator pedals of a certain manufacturer on certain models.”
The email continued: “The time to hide on this one is over. We need to come clean.”
The email was sent in January of 2010. Three days later, the carmaker, bowing to pressure from Congress, federal regulators and consumers, issued a recall on sticking pedals affecting millions of vehicles.
This is clear evidence of a cover up and a concerted effort to deceive both the NHTSA and the American people of a very real problem that could result in serious personal injury and even wrongful death.
The Government Reacts
Sen. Jay Rockefeller, D-W.Va., chairman of the Senate Commerce Committee, and Rep. Henry Waxman, D-Calif., chairman of the House Energy and Commerce Committee, are working on legislation to reform the nation’s auto safety legislation.
Sen. Amy Klobuchar, D-Minn., said the disclosure that Toyota told dealers in 31 European nations about sticky pedal problems in September, four months before it took action in the United States was unacceptable.
“The safety of the American people should never be left to negotiation, and Toyota’s responsibility to its customers should be the same in Belgium as it would be in Bemidji,” Klobuchar said. “Toyota’s reported withholding of vital safety information is a glaring sign that NHTSA must be given more authority to ensure driver safety. I will continue to work with the Commerce Committee to develop legislation that will address gaps in highway safety oversight, including strengthening the penalty structure, and provide government regulators with the tools they need.”
This implies that the lackadaisical attitude toward the sudden acceleration issues was a funding problem. Of course, this doesn’t address the issue of the lack of enforcement of previous warnings issued in 2007. It also doesn’t address the reports of poor treatment by the NHTSA toward Toyota customers when they reported the problem to the agency.
Perhaps those issues will also be addressed when the overhaul and reform is ratified by congress.
Toyota Recall Lawsuits
This whole issue has left Toyota owners holding the bag. On top of that, there has been speculation that the real issue regarding the recall, software glitches in the Toyota electrical system as found in independent studies, has been disregarded. This could mean that the booming sales of Toyotas due to low financing could lead to serious issues for customers.
As a current or new Toyota owner it is your right to know the risks that are specific to the product you are buying. If Toyota knew of the glitch in the product, but still sold it to you without disclosing the dangers associated with the product specifically then they are liable. You may be entitled to compensation for their deception.
There is also the scenario where you have actually been directly affected by the sudden acceleration issue and either been injured or have had a loved one die in a Toyota, then call Phillips Webster, an experienced defective product law firm that can consult you on all of your legal options.
Learn More About:
- Manufacturer Defects Lawsuits
- Defective Design and Product Liability
- Crashworthiness
