By now millions of vehicle owners across the globe have been alerted to vehicle recalls from several manufacturers, the most prominent of which has been the recalls by Toyota. This has done significant damage to the Toyota brand – a brand that has always been perceived as that of safety conscious manufacturer with close attention to detail and quality.
The media and especially social media have alerted the Toyota owners to the safety concerns – but what is the impact on the finances of the vehicle owners and more specifically – are there specific car insurance concerns that they need to be aware of? We would like to discuss this important aspect in this Blog and provide some advice to the owners of recalled vehicles!
Background to the Toyota recalls
Japanese car manufacturer Toyota recalled vehicles due to complaints over sticking acceleration pedals and floor mat pedal entrapment that created serious safety concerns. A voluntary recall was issued by Toyota for eight of its brand name vehicles, including the 2010 Prius, Camry and Lexus HS 250 vehicles.
The recall involved 2.3 million vehicles to correct a sticking accelerator pedal — this is not the same recall involving 4.2 million Toyota vehicles for out-of-place floor mats.
Toyota is well aware of the impact of these recalls on both the bottom line and the brand value and are now carrying out stringent safety tests and modifications. Toyota will incur the costs for such safety tests and modifications.
What impact has the recall had on car insurance?
One of the components of your car insurance premium is the type of vehicle you are driving. The make and model of that vehicle is an important consideration in calculating the premium payable. Car insurers may increase the car insurance premiums where they feel that there is a sufficiently increased risk to driving specific vehicles.
Toyota however has a good reputation in the insurance industry on safety issues, and that will help keep auto insurance rates at current levels. Insurance rates could even decrease as the resale value of the vehicles drops because of the recall. According to the auto research Web site Edmunds.com, the average value of a recalled Toyota vehicle has fallen between 4% and 8% in the past two weeks alone.
Will the recalled vehicle owners still be insured?
Toyota drivers can’t lose their coverage because of the recall — they’re covered in case of an accident from the date of purchase of the car insurance policy. Some US insurance companies have already confirmed that drivers shouldn’t see their insurance rates increase as a result of the recall, but they will have to immediately perform preventative measures by having the cars checked and fixed.
What if you have already been in an accident caused by the defective acceleration pedal?
If you have been driving the recalled vehicle and caused an accident where any recalled part failed, the insurance company is likely to go after Toyota to cover any damage to the vehicle. If you have not answered the request to have your vehicle returned the insurance company may hold you partially responsible for the accident.
Of concern to the vehicle manufacturer is that car insurance companies might also go back in time and consider previous accident claims wherein these vehicles were involved. They might have to pay more than just for the inspection and modification of recalled vehicles.
It will be interesting to see what the effect of the recall might be in cases where the vehicle was involved in an accident, a claim was submitted and the vehicle owner lost his “no claims bonus” as a result of such claim…
Advice to owners of recalled vehicles
It is most important to obey the call to have the vehicle returned for inspection to Toyota. You need to do so not for the purposes of affordable car insurance premiums, but for the safety of you, your passengers and other road users!
The same would apply to the owners of recalls from other manufacturers. We need to be alert and vigilant to communications from our vehicle manufacturers and ensure that our vehicles are roadworthy and safe modes of transport at all times!