Insurer charges Toyota for claims

DETROIT — 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.
Other companies are expected to follow, and demands for repayment of claims — called "subrogation" in the insurance business — could end up costing Toyota from $20 million to $30 million, said Mark Bunim, an attorney with Closed Case, a mediation firm. Customers could see a bonus from any repayment: Insurance deductibles they paid could be refunded.

"If we didn't incur any risk, we get our part back and you get your part back," said Dick Luedke, a spokesman for State Farm.

Toyota has recalled 7.7 million vehicles in two recalls related to sudden acceleration, one involving floor mats that can jam gas pedals and one involving pedals that stick. The government last week fined Toyota the maximum $16.4 million for violating a five-day deadline in reporting the sticky pedals. Toyota has not decided whether to appeal.

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State Farm 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 driver had reported the same problem to her mechanic twice before, State Farm wrote.

The letter was copied to the National Highway Traffic Safety Administration, which replied by saying it had looked into similar complaints, starting in August 2006, and closed the investigation on April 3, 2007. State Farm wasn't reimbursed.

If Toyota doesn't end up paying for accidents that insurers link to sudden acceleration, the cost could trickle down to consumers, who could end up paying higher insurance rates for Toyota vehicles.

Whatever happens, resolution won't come soon.

"Someone has to go through each and every auto claim, and then try to make a determination if it involved unwarranted acceleration," Bunim said. "It could take months."

Toyota spokesman Brian Lyons said subrogation claims are common between insurers and automakers. Beyond that, Toyota had no comment.

Despite recent troubles, Toyota's vehicles don't cost much to insure because they are generally safe and reliable, said Peter Moraga, spokesman for the Insurance Information Network of California. That could change if the problems drag on, he said.

"That's when we would see an impact on insurance rates," he said. "It really depends on what Toyota does in terms of fixing the problem."

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