More and more Americans have recently detected that they have a rich uncle in Japan. The uncle’s name is Toyota. From LaHood to a bevy of lawyers, all have a yen for Toyota’s money. Latest (but surely not last) to join the fray: State Farm. You know, that same insurance company that had disclosed all those claims to NHTSA and never received an answer. They went public with the story a few days before the congressional hearings. Now we know why: Like a good neighbor, State Farms wants its money back.
“Armed with reports of accidents for which they’ve already paid claims, State Farm insurance has asked Toyota to repay them for any crashes related to unintended acceleration by its vehicles,” reports USA Today. The request for a little Farm Aid is just the beginning.
Other insurance companies are expected to – make that will follow and ask for money. In the trade, this is called “subrogation.” No, it’s not a kinky sex practice. It is a complicated matter on which a Wikipedia has a whole article, in case you are interested. Executive summary: The insurance companies did pay the claim, Toyota is supposed to hold the bag. To the tune of another $20m to $30m. If the insurers get their money back, customers who filed a claim may get their deductibles refunded. (Just make sure that you will.)
State Farm had sent a letter to Toyota in September 2007 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 letter was copied to the National Highway Traffic Safety Administration. The NHTSA replied they had looked into similar complaints, starting in August 2006, and closed the investigation on April 3, 2007. State Farm wasn’t reimbursed.
What if Toyota refuses to pay? Easy, says USA Today: “The cost could trickle down to consumers, who could end up paying higher insurance rates for Toyota vehicles.” This gives the insurers more leverage than the law: Toyotas are cheap to insure at the moment. If it changes, it will hurt sales. Toyota must decide to settle now, or pay later.
Toyota has no comment.