Insurers aim to recoup claims linked to Toyota

MIAMI - Insurance companies are gearing up to recoup from Toyota Motor Corp. money they paid for claims in crashes involving sudden acceleration, the subject of major safety recalls by the Japanese automaker. It could also mean money back for some drivers who paid deductibles on the claims.

At least six major insurers, including State Farm Insurance Cos., Allstate Corp., and Geico, have begun examining past claims involving the recalled vehicles, which number about six million in the United States and eight million around the world.

Insurers can request that Toyota pay them for the claim if a vehicle defect is proven to be a key factor in a crash, a long-standing industry practice known as subrogation. Many insurers have begun notifying Toyota that they will do just that.

"We're seeking to have them share in some of the financial liability, because part of it is their fault," State Farm spokesman Phil Supple said.

The move could repay some Toyota owners their out-of-pocket costs due to crashes but probably would not have much of an impact on the premiums drivers pay.

Insurance companies typically refund deductibles - the amount a policyholder must pay before the insurance takes over - to their customers when they are repaid in such cases, officials of several companies said this week. None would release any financial estimates or the number of potential crashes, but given the size of the Toyota recalls, the liability could be in the millions of dollars.

State Farm has sought reimbursement from Toyota in cases where cars have sped out of control on their own at least as far back as 2007, according to a letter the company provided to federal regulators. The letter, dated Sept. 18, 2007, sought a formal Toyota investigation into a crash involving a 2005 Camry that surged forward at a stop sign and hit another car.

Toyota issued a limited floor-mat recall in 2007, but it did not cover the 2005 Camry at issue in the State Farm letter. In the last few months, the automaker has issued two unwanted acceleration recalls for several of its popular models, one to fix floor mats the company says can jam floor pedals and one to repair what it calls a problem with pedals that can stick. Prius hybrids have also been recalled for brake issues.

A Toyota statement declined comment on the insurers' attempt to recoup claims but added that it was "a common practice in the automotive industry." Allstate spokesman Mike Siemienas agreed. "This is business as usual for Allstate," he said.

Experts say most insurers have agreements with automakers to negotiate a confidential settlement over defect-related claims - and the manufacturers usually have insurance to cover most of the costs. Toyota declined to comment beyond its statement.

"It will be a whole bunch of small claims," said Mark Bunim of the mediation firm Case Closure L.L.C. in New York. "What you have here are the fender benders. The major claims, where someone's a paraplegic, they will not be part of that group." Those cases, instead, usually are resolved in lawsuits.

Not every accident in a recalled Toyota can be blamed on a defect like sudden acceleration, Insurance Information Institute spokeswoman Jean Salvatore said.

"Just because you drive one of the cars that was recalled doesn't mean the accident was caused by the faulty accelerator," she said. "It would have to be determined that the cause of the accident was because of the defect."

That can take a great deal of time, particularly with such a large volume of recalls. The paperwork for each potential claim is painstakingly reviewed on a case-by-case basis before the insurer submits it to the automaker for possible reimbursement.

Salvatore also said vehicle recalls by themselves usually had little impact on whether a driver's insurance premiums would rise. She said there were so many other factors, such as a person's driving and credit history, the car's safety record in crashes, whether the vehicle was frequently targeted by thieves, and so on.

"So, it's very difficult to say that rates will go up or down because of this," she said.