Consumer Fraud

State Farm seeks repayment from Toyota for sudden acceleration claims

State Farm Insurance, the nation’s largest auto insurer, is asking Toyota for reimbursement on a number of claims it paid for crashes involving unintended acceleration in Toyota vehicles. Called “subrogation” in the insurance industry, the repayments could amount to as much as $30 million, according to legal estimates.

Since 2007, State Farm has alerted federal safety regulators numerous times about a rise in the number of sudden acceleration reports involving Toyota vehicles. The insurer based its warnings on information culled from its massive 40-million-customer database and submitted its findings to National Highway Traffic Safety Administration more than a year before the agency pressured Toyota to issue the first of its acceleration-related recalls.

The total number of Toyota vehicles recalled for possible sudden acceleration defects currently approaches 8 million.

If Toyota agrees to compensate State Farm, the insurance company would refund deductibles customers paid in certain cases.

“If we didn’t incur any risk, we get our part back and you get your part back,” State Farm spokesman Dick Luedke told USA Today.

If Toyota refuses to pay for the accidents State Farm has linked to sudden acceleration, the cost would ultimately be absorbed by customers. Currently, insurance on Toyota vehicles is a relative bargain because the vehicles have had a record of safety and reliability. That could change, however, if Toyota’s sudden acceleration woes carry on.

“That’s when we would see an impact on insurance rates,” Peter Moraga, spokesman for the Insurance Information Network of California, told USA Today. “It really depends on what Toyota does in terms of fixing the problem.”

This isn’t the first time State Farm has sought repayment from Toyota over a sudden acceleration claim. In 2007, it asked Toyota to pay for damages that occurred after a crash involving a 2005 Camry. In that case, the driver reported sudden acceleration problems to her mechanic twice before her vehicle crashed. State Farm sent a duplicate of the letter to NHTSA, but Toyota never reimbursed the company.