State Farm said it is considering subrogation
action against Toyota for auto claims that occurred due to vehicle
defects that have been the subject of a major recall of Toyota vehicles.
Subrogation refers to an insurance company seeking reimbursement from
the person or entity legally responsible for an accident after money has been paid out on behalf of the insured.
The Bloomington, Ill.-based insurer told USA Today
it had notified the National Highway Traffic Safety Administration
about possible acceleration issues in Toyota and Lexus models back in
Kip Diggs, State Farm spokesman, told NU Online
that subrogation is an option for the insurer if it can show that the
product was partially or fully to blame for a given auto claim.
Last week, Allstate said as part of its standard
process on recalls it would be looking at accident claims on the
affected Toyota automobiles, and Mark Bunim, president and chief
executive of Case Closure, a New York-based insurance arbitration and
mediation firm, told NU Online he would expect that all large auto
insurers would examine claims involving Toyotas over the past five or
six months to see how many are tied to or could be tied to the gas
“Then they are going to try and subrogate. And why not?” Bunim said.
Diggs said it is too
soon at this point for State Farm to have started the subrogation process on any
specific auto claim, but he said subrogation is something that is
standard within the industry and would be a consideration going forward.
“Any time a claim is filed, that’s one of the things we look at to see if there is a subrogation issue there,” Diggs said.
Regarding the Toyota recall specifically, he said, “[Subrogation] is something that we’re considering.”
Meanwhile, the Property Casualty Insurers
Association of America (PCI) said the recall should not result in
higher insurance rates for Toyotas.
“Looking forward, it is unlikely that rates would
be affected by the recall,” said Robert Passmore, senior director of
claims for PCI. “Over the years, Toyotas have developed a good
safety record as evidenced by the popularity of their vehicles, so it
is unlikely that there will be enough accidents caused by the faulty
pedals that rates will increase. Insurers look at the cost of claims
over a period of time for a vehicle. They are interested in how much it
costs to repair a vehicle and how often the vehicle is involved in an
He further advised owners of Toyota vehicles to
follow the manufacturer’s instructions regarding the recall and contact
a dealer without delay if they have any gas pedal issues.
“In the rare occurrence where
the recalled part causes an accident, the driver’s automobile liability
or physical damage insurance will provide coverage. If the pedal is a factor, the insurer
will pay the claim for the driver and then likely seek to be reimbursed
by Toyota," said Passmore.
Actual legal actions against the carmaker on behalf of persons injured or killed from defects have been mounting, and The Law Journal listed more than a dozen class actions alleging Toyota failed to
properly disclose mechanical problems. It also said shareholder suits
were likely to argue the company’s stock value had fallen as a result of the negative publicity.