US firms sue Toyota for defects

Seven insurance companies file suits against giant Japanese carmaker for accidents they allege were due to design flaws. Last Modified: 05 Jan 2011 06:45 GMT

Toyota is facing a number of lawsuits filed by customers and insurance firms [Reuters] Seven insurance firms in the US have filed lawsuits against Toyota, the Japan-based world's largest automaker, over payouts made after alleged car defaults caused crashes. The firms' move on Thursday at Los Angeles County Superior Court follows Allstate Insurance Co suing Toyota last year after claims made when Toyota vehicles accelerated unintentionally. The National Highway Traffic Safety Administration, a US federal agency, is investigating up to 89 deaths since 2000 that may have links to faulty acceleration in Toyota-made vehicles. The government, however, has confirmed only five deaths from two crashes. Hundreds of car-owners have already filed lawsuits against Toyota over the supposed defects, but insurance firms have far greater resources to see-through litigation and retrieve losses said to be in excess of $230,000. Allstate filed last October for $3m for itself and its affiliates, and Toyota faces civil liability claims of up to $10bn in US courts after claims of wrongful death, personal injury and consumer fraud were made against the company. 'Allegation unfounded' The seven insurance firms' lawsuits echo past complaints that Toyota ignored a defect that caused some of its engines to accelerate uncontrollably and failed to install a brake-override system that would have prevented accidents. Denying the allegations made last week, Toyota hit back hard, saying that such disputes with insurance firms are commonplace in the industry. "Toyota believes that any allegation that a vehicle-based defect is the cause of unintended acceleration in this or any other complaint is completely unfounded," the company said. Toyota has said that unintended acceleration was caused by a mixture of driver error, faulty floor mats and sticky accelerator pedals and denies there is a design defect, as is alleged in some lawsuits. 'Worst lawsuit' Tom Baker, a professor at the University of Pennsylvania Law School, said that the most recent lawsuits will be some of the most unwelcome of recent news for the company. "This has to be the worst news that the general counsel of Toyota has gotten in a while. If I'm Toyota and I see name-brand insurance companies suing me, I am definitely paying attention." The companies that filed complaints against Toyota last week are: American Automobile Insurance Co, Fireman's Fund Insurance Co, National Surety Corp, Ameriprise Insurance Co, IDS Property Casualty Insurance Co, Motorists Mutual Insurance Co and American Hardware Mutual Insurance Co. Toyota admitted last week that it had paid $10m to a Californian family to settle legal claims after four people were killed in a 2009 crash that prompted recalls of some of the automaker's cars. The firm has recalled more than 10m vehicles since late 2009, 5.4m of those in the US. The US government has already fined Toyota $48.8m for its handling of three recalls dating back to 2004.

Source: Agencies