After Toyota announced that it will recall 8.5 million vehicles, the company is facing a wave of problems, primarily from an increasing number of consumer class-action lawsuits. Aside from being worried about the dwindling resale value of their vehicles, concerned owners of recalled Toyota car are now contacting their insurance providers to ensure that their auto policies include coverage for a recalled car.
Toyota Motor Corporation has recently announced that it will start its biggest recall in the company’s history to repair sticking gas pedals that have been reported to cause unexpected acceleration in car models and ill-fitting floor mats. In addition to this mass recall, another recall to fix braking problems of the famous top-selling Toyota hybrid car Prius was announced.
Lawsuits from consumers asking for fiscal damages for the depreciated value of their recalled Toyota models have been filed in nearly 30 US states. According to sources, the number of customers filing lawsuits is now equivalent to the number of consumers calling their insurers verifying if the said recall with affect their coverage. Two of the largest car insurance companies in the US already published reports that the number of customer calls they received have shot up after Toyota’s announced recall.
Insurance experts quickly answered “yes” – existing auto policies will include coverage for recalled models. If a recalled part of the vehicle causes damages or injuries, the insurance company will most likely ask Toyota to pay the damages. Auto policy providers say that accidents caused by a recalled part will be included in the car’s liability or collision coverage. If investigators find out that a defective accelerator caused the collision, the insurer will pay the accident claim and then later on go to Toyota for reimbursement. If Toyota duly pays the insurance provider, then the consumer will get a fraction, if not all, of his deductible returned. Most companies are now sending notices to their clients confirming that they will receive the necessary coverage protection.
Meanwhile, to respond to questions asking if the recall will cause premium hikes, PCIA (Property Casualty Insurers Association) spokesman Jeffrey Brewer answered it by saying that Toyota vehicles are known to have good safety records which helps in keeping costs down. Many factors determine premium rates and a recall will not be sufficient to trigger a premium increase. In addition, PCIA senior director Robert Passmore said that this kind of unforeseen incident is what car insurance is for. As insurance is designed to cater to unanticipated future events, insurance companies should be able to react immediately to the situation and reassure customers of their safety.
