Financial Toll On Toyota May Get Higher

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The mounting financial toll on Toyota and the recall of millions of its vehicles may get higher. Insurance companies and regulators are preparing for an onslaught of rate revisions from consumers who were in accidents and now pay higher rates.

GUY RAZ, host:

Now, while the Toyota recall is prompting safety concerns for owners, it's also leaving some wondering how it might affect their insurance.

From member station WFAE in Charlotte, North Carolina, Julie Rose reports.

JULIE ROSE: Safety is the main worry for a lot of Toyota owners right now. Sharon Scott(ph) already has the fix squared away for her recalled 2007 Camry. So she's feeling pretty relaxed as she waits in line for fresh popcorn at the movie theater. At least she was relaxed until I showed up.

Have you given any thought to what this might do to your insurance rates?

Ms. SHARON SCOTT: No, I had not. Thanks a lot. Do you think it will have an effect on insurance?

Mr. ERIC HARDGROVE (Spokesman, Nationwide Insurance): The fact that Toyota has issued a recall has no impact on customer rates nor eligibility.

ROSE: Eric Hardgrove is a spokesman for Nationwide Insurance.

Over at State Farm Insurance, Kip Diggs goes into a bit more detail.

Mr. KIP DIGGS (Spokesman, State Farm Insurance): It's claims experience that would make rates go up, not the recall in itself.

ROSE: In other words, the number of accidents around the country involving, say, a Toyota Avalon is what determines the basic premium to insure one. Ironically, Diggs says, the Toyota recall might actually be good for your insurance premium if fixing the accelerators and floor mats means fewer wrecks.

Mr. DIGGS: You could see rates go down as a result of fewer accidents, yeah.

ROSE: So for, federal transportation statistics suggests there problem weren't enough incidents involving the faulty Toyotas to have a huge impact on insurance rates. But it wouldn't be a surprise to see Toyota owners who want a partial refund on their insurance because they think a bad accelerator was the real culprit in a past accident.

State insurance regulators across the country are bracing for those appeals. At the North Carolina Rate Bureau, Ray Evans welcomes them.

Mr. RAY EVANS (General Manager, North Carolina Rate Bureau): If they've had a citation or an accident that has resulted in charges on their policy and their insurance premium has gone up, then they should give us a call, and we go through the process of hearing what they have to say.

ROSE: Right now, most state insurance regulators are taking the appeals case by case. But Massachusetts has already issued a consumer alert inviting Toyota owners to go ahead and step on the gas, so to speak, in making an appeal.

A Toyota spokeswoman says it would be highly inappropriate to speculate on how that might affect the automaker. It does make you wonder, though, if all the extra wrangling and paperwork will boost overhead expenses for your insurance company and raise your rates in the end. Actually State Farm's Kip Diggs says insurers won't eat those costs.

Mr. DIGGS: We as the insurance company go back to that manufacturer and say your product caused this situation, and you need to compensate us for that.

ROSE: If it works, you get a refund, your insurer gets his money back and Toyota's troubles only deepen.

For NPR News, I'm Julie Rose in Charlotte.

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