Report: Auto Insurers to Seek Reimbursement from Toyota
April 20, 2010 – Auto insurance providers who have paid out claims caused by recalled Toyota vehicles likely will be reimbursed by the automaker, and some vehicle owners might get a refund on deductibles, the Associated Press reported today.
Several of the largest auto insurance companies in the United States are looking over prior auto insurance claims involving Toyota Motor Corporation vehicles accelerating out of control, including Allstate, Geico and State Farm, according to the Associated Press report. Toyota officials recently recalled more than 9 million vehicles for various problems, including sudden acceleration, braking problems and problems with traction control systems on various vehicles.
The subrogation clause of insurance contracts give insurance companies the right to pursue legal remedies after paying insurance claims. The auto insurers can recoup damages arising from claims paid due to faulty Toyota vehicles, but policyholders would be entitled to at least a partial reimbursement of deductible amounts paid, the Associated Press reported.
The potential disbursements to auto insurance companies is just one of many financial troubles Toyota faces over its recent vehicle recall efforts.
Toyota officials yesterday agreed to pay a $16.38 million federal fine regarding its handling of vehicle defects. And dozens of class action lawsuits have been filed regarding the recently falling values of used Toyota vehicles totaling a potential $3 billion in liabilities for the world’s largest automaker. The class action suits are in addition to existing lawsuits for legal liability in the dozens of accidents and deaths attributed to faulty Toyota vehicles in recent years.
Attorneys representing disgruntled Toyota owners are accusing company officials of deliberately ignoring reports of safety and mechanical issues with various models. The plaintiffs contend delays in correcting known problems have accelerated the loss of value for recalled Toyota models, according to the litigants. Attorneys cited recent devaluations of popular Toyota Corolla and Sequoia models, which Kelley Blue Book officials recently depreciated by up to $750 in light of the recall efforts, the Associated Press reported.
Officials for the National Highway Traffic and Safety Administration recently said they have received complaints of at least 52 deaths caused by sudden acceleration in Toyota vehicles since 2000. Toyota Motor Corporation officials recently recalled nearly 10 million vehicles worldwide to correct problems with vehicles suddenly accelerating and other problems.
The first vehicle recall issued last year was to fix floor mat problems blamed for causing some vehicles to accelerate suddenly. When that fix failed to fully address safety issues, Toyota issued another recall of several popular models, including the Camry and Corolla, to replace gas pedals in millions more vehicles in China, Europe and North America. And Toyota officials last week issued yet another recall, this time for the automaker’s popular Prius hybrid and other hybrid vehicles for braking problems blamed on faulty software programming.
The latest recall comes in addition to the about 9 million vehicles across eight model lines Toyota officials have recalled already worldwide – including about 2.3 million vehicles in the United States. The Japanese automaker has recalled all Camry models manufactured from 2007 to 2010 as well as 2009 through current-year models Corolla, Matrix and the RAV4. Also recalled are the 2005 through 2010 Avalon, the 2008 through 2010 Sequoia and the 2010 Highlander. The recall covers about 9 million vehicles sold in North America, China and Europe.
Toyota officials say the combined recall efforts could cost the company about $2 billion. Toyota is the world’s largest manufacturer of automobiles and recently overtook bankrupted General Motors as the auto industry’s top seller.
Toyota Agrees to $16.38 Million Fine; Recalls More Vehicles
April 19, 2010 – Officials for the Toyota Motor Corporation today agreed to pay a $16.38 million federal fine without admitting fault regarding the automaker’s recent handling of safety issues that eventually spurred a massive, ongoing global vehicle recall.
Officials for the National Highway Traffic Safety Administration last month announced they are seeking a $16.38 million penalty to be paid by Toyota for allegedly delaying by at least four months any effort to notify the federal highway safety administration of known safety issues with several popular vehicle models. Officials for Toyota eventually recalled some 2.3 million vehicles in the United States in January to replace their gas pedals and ensure they cannot become “stuck” and cause a vehicle to accelerate out of control. The $16.38 million fine is the single largest ever levied on an automaker by the National Highway Traffic Safety Administration.
Although Toyota officials agreed to pay the fine, they did not admit any fault in the matter and today announced yet another vehicle recall – this time for some 9,400 Lexus GX 460 SUVs manufactured this year and 600,000 of the company’s two-wheel-drive Sienna minivans manufactured from 1998 to 2010. The Lexus GX 460 recall was issued in the wake of a recent Consumer Reports’ assessment placing a “do not buy” recommendation after independent tests revealed potential problems with the vehicle’s stability-control system.
Toyota officials likely acted quickly on the stability-control problem with the Lexus GX460 after being accused of delaying recalls of known problems with other vehicles, which resulted in the $16.38 million fine after federal officials found evidence Toyota officials knew of the potential safety problem months before notifying federal law officials, per U.S. law.
“We now have proof that Toyota failed to live up to its legal obligations. Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. U.S. Transportation Secretary Ray LaHood said when announcing the record $16.38 million fine last month.
Federal law requires automakers to notify federal safety regulators within five business days of identifying a potential safety defect in vehicles. Federal officials allege Toyota officials were aware of the potential problem with gas pedals no later than Sept. 29, 2009, when company officials sent documents detailing the problem and how to fix it to dealerships in Europe and Canada, according to the National Highway Traffic Safety Administration. Federal officials say the documents indicate Toyota officials were aware the problem existed in the United States, as well.
Although the $16.38 million fine for the faulty gas pedal problem is the maximum amount federal officials can levy for a single violation, other fines might be levied for other Toyota’s handling of other vehicle safety issues that were part of the automaker’s recent, massive recall efforts.
Officials for the National Highway Traffic and Safety Administration recently said they have received complaints of at least 52 deaths caused by sudden acceleration in Toyota vehicles since 2000. Toyota Motor Corporation officials recently recalled nearly 10 million vehicles worldwide to correct problems with vehicles suddenly accelerating and other problems.