Will U.S. Auto Insurance Carriers be paying for Toyota’s negligence?

When you sign an auto insurance application, make your down payment and pay your monthly bill, your auto insurance carrier agrees to assume financial responsibility and pay for your driving mistakes during the policy period.

Example: Let’s say, you are driving home one evening. While approaching a red light, your accelerator sticks and you can’t stop your car. You drive through the red light striking another car. Not only is your car severely damaged, the car you hit needs to be towed and its occupant is taken to the hospital. By purchasing any type of insurance policy, the insurance company agrees to take on the financial responsibility of your negligence. They agree to pay for the damage and medical bills caused by your at fault accident.

When you have auto insurance with adequate liability limits, it will pay for all the damage you caused and will also pay to have a lawyer represent you if you are sued in court.  But what happens when an auto accident appears at first to be your fault, but was in, truth, caused by an auto manufacturer’s defect?

Unless you have lived under a rock or on a desert island for the last couple years, you would know Toyota Motor Corporation was forced to start a recall of over 8.5 million of their cars because of faulty accelerators or gas pedals. The cars in question had suffered a history of sudden acceleration which have resulted in hundreds of accidents world-wide.

This malfunction has been responsible for many car accidents and injuries. More vital; these accidents have also resulted in the deaths of 34 people. Hearings by the U.S Congress are pending a start date, while the National Highway Traffic Safety Administration (NHTSA) concludes its investigation into whether Toyota recalled their cars in a timely manner. Regardless, Toyota has opened themselves up to law suits which will play out in America’s courts for the next 25 to 30 years.

Toyota is battling a number of different types of lawsuits, including a few interesting ones. One is a Class Action lawsuit representing Toyota Car owners claiming their cars have lost value as a result of the recall.

These car owners feel when they attempt to resell their Toyota or Lexus (which manufactures Lexus) to another buyer, they will be forced to sell the car for less money than a car of equal value without the same type of recall issues.

Considering the purchase of a new car is the second largest purchase a family will make; this agent feels this class action law suit has some legitimacy.

Other lawsuits brought are product liability claims on behalf of people killed or injured in auto accidents caused by the Toyota accelerators. Others are looking for replacement of their vehicle purchase.

Although there has been thousands of lawsuits brought against Toyota and Lexus for all types of traditional reasons; this agent has not heard of any legal actions being brought against the manufacturer for recovery of an owners auto insurance claims paid as a result of accidents which were caused by the Toyota defect.

If you are a Toyota owner and you were involved in a car accident because of a sticking gas pedal; the state law where your car is registered would decide the accident to be your fault. The law states you must have control of your car at all times. If you have an accident because of a cars defect; you will be charged with an at fault accident.  This accident will cause your auto insurance to increase through no fault of your own.

Your auto insurance carrier would pay for both your car being repaired and the “Not at fault” driver’s car and injuries. Since, in all states, an auto insurance carrier has the right to subrogate against another carrier for claims paid on the other’s behalf, the same rights should apply in the situation of a factory defect.

Toyota Dealers received over 2,600 complaints of sudden acceleration from 2000 to 2010. When you think about how many potential every day auto insurance claims have been paid as a result of  Toyota’s latest recall, the amount paid by traditional auto insurance carriers could be in the hundreds of millions of dollars.


Michael E. Dortch
President &  Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602