Big personal auto insurers will be examining past auto accidentclaims involving Toyota vehicles for possible subrogation action,an insurance arbitration executive predicted, as Allstate said ithas a case review underway.

Mark Bunin, president and chief executive of Case Closure–a NewYork-based insurance arbitration and mediation firm–said large autoinsurers are “going to amalgamate their serious claims involvingToyotas over the past five or six months, and see how many of themare tied to or could be tied to the gas pedal recall.”

“Then they are going to try and subrogate. And why not?” addedMr. Bunin.

At Northbrook, Ill.-based Allstate, Mike Siemienas, aspokesperson, said cases are being examined, but it is too early todiscuss whether the company will be involved in subrogationactivity.

“We will wait and see,” he noted.

“Allstate has processes in place because vehicle recalls occurregularly,” Mr. Siemienas added. “Allstate is in the early stagesof reviewing claims involving Toyota's recalled vehicles. Theresults of this investigation will help Allstate determine theappropriate next steps to take on behalf of our customers.”

In the past after such reviews, the company has institutedsubrogation actions, according to Mr. Siemienas.

Separately, State Farm also said it is considering subrogationaction against Toyota for auto claims that occurred due to vehicledefects that have been the subject of recent vehicle recalls.

Kip Diggs, State Farm spokesperson for the Bloomington,Ill.-based insurer, told NU that subrogation is an optionfor the insurer if it can show that the product was in part orfully to blame for a given auto claim.

He said it is too soon at this point to have started thesubrogation process on any specific auto claim, but thatsubrogation is something that is standard within the industry andwould be a consideration going forward. “Any time a claim is filed,that's one of the things we look at–to see if there is asubrogation issue there,” Mr. Diggs said.

Regarding the Toyota recall specifically, he said,“[Subrogation] is something that we're considering.”

Actual legal actions against the carmaker on behalf of personsinjured or killed from defects have been mounting. Since lastNovember, at least 10 negligence lawsuits have been institutedseeking class-action status against Toyota in the United States andCanada, according to the Web site, www.attorneyatlaw.com.

Those cases seek compensatory damages for medical bills andother out-of-pocket expenses associated with the defective carparts and also punitive damages.

Mr. Bunin, who is an attorney, said it “may be a stretch,” butsome plaintiffs with only one vehicle may sue the automaker forout-of-pocket costs and rental costs while they are unable to drivetheir own vehicle.

“Is Toyota insured for that?” he wondered, adding that “theconsumer is going to go after the dealer. Does the dealer carry hisown coverage? Is the dealer going to have to sue Toyota? That'sanother insurable issue. A lot of issues are going to have to getfleshed out.”

Toyota, Mr. Bunin said, will pay for the first few millions ofdollars in claims itself, and then the firm's insurance layer wouldtake over. “The worldwide market is involved in this. It is not aU.S. insurance question per se,” he remarked.

With all the publicity and notice surrounding the recall, Mr.Bunin said that an insurer could argue it has a right to deny aclaim by someone who failed to bring in the auto for dealerrepair.

“That's a valid defense. Clearly you [the car owner] were onnotice. You are contributorily negligent. That's a basis for denialof coverage.”

According to Mr. Bunin, in addition to its other woes brought onby the recall, Toyota will now see warranty insurers chargingToyota more, because there are indications the firm knew of the gaspedal risk for some time.

There is one facet of the situation for which Toyota has nocoverage, according to Mr. Bunin. The company is “not insured forloss of good will,” he said. “Toyota has lost a lot of goodwill.”

Meanwhile, the Property Casualty Insurers Association of Americasaid the recall should not result in higher insurance rates forToyotas.

“Looking forward, it is unlikely that rates would be affected bythe recall,” said Robert Passmore, senior director of claims forPCI.

“Over the years, Toyotas have developed a good safety record asevidenced by the popularity of their vehicles, so it is unlikelythat there will be enough accidents caused by the faulty pedalsthat rates will increase.”

“Insurers look at the cost of claims over a period of time for avehicle. They are interested in how much it costs to repair avehicle and how often the vehicle is involved in an accident,” hesaid in a statement.

He further advised that owners of Toyota vehicles follow themanufacturer's instructions regarding the recall and contact adealer without delay if they have any accelerator pedal issues.

Mr. Passmore said, “In the rare occurrence where the recalledpart causes an accident, the driver's automobile liability orphysical damage insurance will provide coverage. If the pedal is afactor, the insurer will pay the claim for the driver and thenlikely seek to be reimbursed by Toyota.”