Is the Toyota recall bad news for insurance rates?
The recall of millions of Toyota vehicles has safety implications for drivers, but it may also affect their auto insurance. WFAE's Julie Rose reports: A lot of Toyota owners are obviously concerned about how safe their cars are right now. Money, though, is another worry. How does a recall of millions and millions of cars affect insurance rates? "The short answer is, it doesn't," says Kip Diggs, spokesman for auto insurance giant State Farm. "It's claims experience that would make the rates go up - not the recall itself." Diggs says it's the number of accidents involving, say, a Toyota Camry that makes that car slightly more expensive to insure than a comparable Honda Accord. Ironically, Diggs says the Toyota recall might actually be good for your insurance premiums if fixing the accelerators and floor mats means fewer accidents: "You could see rates go down as the result of fewer accidents. Yes," says Diggs. So far data from the National Highway Transportation Safety Administration suggests there probably weren't enough accidents caused by faulty Toyota gas pedals to have a huge impact on insurance rates. But State Farm's Kip Diggs says it wouldn't be a surprise to see Toyota customers come out of the woodwork looking for a refund on their insurance rates because they think a faulty accelerator was the real culprit in that accident they got blamed for. Numerous other insurance companies and state regulators like Ray Evans of the North Carolina Rate Bureau are bracing for those appeals. "If they've had a citation or an accident that has resulted in charges on their policy - 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," says Evans. Right now, most state insurance regulators are taking the Toyota appeals case by case. But last week Massachusetts became the first to proactively issue a consumer alert inviting Toyota owners to go ahead and step on the gas, so to speak, in making an appeal.