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In light of the recall of virtually millions of vehicles, Toyota executives find themselves in a nightmare, and the ramifications are not yet clear. Historically, recalls of this magnitude will continue to be far-reaching and lengthy over time. In the days of newly emerging details, a deluge of information regarding either repairing gas pedal systems or replacing them entirely to get customers back on the road is the primary focus. We have now shifted from what was thought to be a relatively easy fix of a floor mat problem to also include a gas pedal problem.

Toyota stated that it stopped production and sales of some of its best model cars to concentrate on the repairs of the recalled vehicles. The many angry customers out there want some answers. Reports indicated that communication is difficult, and systems to handle such a mass of communication are overloaded. From a broader perspective, sources say the company’s market has dropped 18 percent, or $28.2 billion. There are approximately 4.2 million vehicles affected by the floor-mat recalls, and approximately 2.3 million affected by the gas-pedal recall. Some models will be subject to both.

Insurance Implications

Let us turn our attention to different aspects of the problem: issues associated with claim-handling, subrogation, and litigation. It has been established that there is a problem with both the floor mats and the gas pedal. Therefore, we have a new perspective toward our investigations of crashes involving Toyotas that are the makes and models included in the recall and details of the accident that could make them suspect for further investigation. What about the vehicles that have previously been involved in accidents? Should insurers reopen those files and pursue subrogation? Were extensive damages wrongly paid by the insurer, who covered the party deemed “at fault” at the time of the original investigation? It’s evident that this will impact several areas of the casualty industry. Simply put, damages, subrogation, and settlements will all be affected not only for current, but also past and future accidents involving Toyotas.

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