Filed Under:Claims, Loss Litigation

Toyota Hit with Subrogation Suit

Allstate Corp. has filed a subrogation lawsuit against Toyota Motor Corp. seeking compensation for the more than $3 million the insurer said it paid out on about 270 accident claims related to the auto manufacturer's allegedly faulty accelerator pedals and other defects.

"Toyota should be held accountable for the financial impact of these accidents," said Allstate spokeswoman Christina Loznicka.

Allstate filed the lawsuit in Los Angeles County Superior Court in an effort, it said, to benefit policyholders. "If Allstate's subrogation efforts are successful, policyholders may receive all or part of their deductible back," Ms. Loznicka said.

Toyota spokeswoman Celeste Migliore said the company had not seen the complaint but believes the "unfounded allegations in this suit have no basis."

According to the lawsuit, Allstate alleges the defects which led to massive recalls by Toyota "were substantial contributing factors in bringing damage" to the insurer's policyholders and that Toyota knew about the problems regarding sudden acceleration in its vehicles for some time.

"Instead of recalling the vehicles and changing their design to improve safety, [Toyota] essentially hid the problem," Allstate alleges in the lawsuit.

The insurer cited data from Safety Research and Strategies Inc. that shows the sudden acceleration defect in Toyota vehicles is to blame for at least 725 accidents, 304 injuries and 18 deaths.

Mark Bunim, chairman of the mediation firm, Case Closure LLC, said Toyota likely has multiple layers of insurers in excess of its self-insurance. Allstate must prove Toyota is to blame for each of the accidents alleged to have been caused by mechanical problems in Toyota vehicles.

"There will be a multiplicity of accident data presented in the mediation process to follow," Mr. Bunim said. This is where the two large corporations could squabble, as Toyota attempts to dwindle down the accidents alleged to have been caused by vehicle defects, he said.

State Farm sent a letter in 2004 to the National Highway Traffic Safety Administration, pointing out a trend in sudden acceleration in Toyota vehicles.

Since then, the insurer has asked for reimbursement from Toyota on claims related to the defect but has stopped short of filing litigation, said State Farm spokesman Phil Supple.

State Farm continues to speak with the auto maker about these claims, Mr. Supple said.

On Oct. 4 Toyota updated the media on its efforts to fix the sudden acceleration problem. About 80 percent of the sticking pedal modifications have been completed on the 2.3 million vehicles that have been recalled, Toyota said.

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