It is the season of the summer sale with the 4th of July celebrations underway. With so many “great deals” on new cars, it’s hard to resist the snappy slogans on TV beckoning buyers for a test drive—especially when this particular driver has over 130,000 miles on the car and a new sound knocking by the tires at every turn of the wheel. But consumers need to be aware of the many recalls that have plagued the auto industry.
Over the last three years, stories about massive auto recalls have peppered the headlines. The recalls have affected over 7 million drivers throughout the United States and have left us all fearful of more than just traffic and fender benders. The auto recalls range from defective airbags, faulty ignition switches to complete loss of steering, and involve almost all of the makes of vehicles from Volkswagen, Honda, Toyota to GM, and many other makes.
Takata, the manufacturer of the faulty air bags which were installed in millions of vehicles, recently filed for bankruptcy (1). A fund of $125 million will be established to compensate car owners and their families who were injured as a result of the faulty air bags. However, now that Takata has filed for bankruptcy, there are no reports yet about how the filing will affect the creation of the settlement fund. The faulty airbags caused the deaths of 11 people and serious injuries to 180 (2). The bankruptcy will also cause the automakers—mainly Honda, Toyota and GM—to pay for replacing the remaining airbags.
While the Takata air bag recall is the largest is in the auto industry’s history, with 42 million effected vehicles, the General Motors recall for faulty ignition switches has caused more deaths and serious injuries—124 deaths and 275 serious injuries (3). Drivers of vehicles with faulty switches suddenly lose power steering or anti-lock brakes and control of the vehicle while driving because the faulty ignition switch would accidentally turn off. As of December 2015, GM paid out $594.5 million from its settlement fund to compensate the injured parties.
As of late last week, GM is no longer under the oversight of the National Highway Traffic Safety Administration because of the recalls and will resume a “traditional” communication process with the Federal Agency. (4,5) Even though GM has settled many of the lawsuits, as many as 203 Federal lawsuits are still pending. GM tried to block lawsuits filed prior to its bankruptcy in 2009, but “in April, the U.S. Supreme Court let stand a lower court ruling that blocked GM’s effort to scuttle many private lawsuits.”(6)
How a Structured Settlement Could Help
Since many of the auto recall claims involve injuries and fatalities, attorneys should consider incorporating a structured settlement annuity as part of the claimant’s settlement, especially in the event that the accident involved children. Plaintiff attorneys should contact their structured settlement consultants early in the settlement process so that the consultants can learn the issues surrounding the case and overall financial situation of the claimant. In that way, the consultants can develop a comprehensive structured settlement and overall financial plan that meets the specific future needs of the claimant and therefore, prevent the need of the claimant selling any payments in the future. A structured settlement can help establish a financial base for plaintiffs so, if designed properly, there will always be an income stream on which they can rely, no matter what happens in their future. The benefit design can have a guaranteed income stream that will help secure your client’s financial future, backed by highly rated life insurance companies. Payments can be flexible to accommodate the plaintiff’s unique needs.
Additionally, remember that plaintiffs can structure a portion of his or her settlement instead of the settlement’s entirety, which will free up cash so they can invest in other financial products with higher yields and higher risk. With a structured settlement annuity as their financial base, you can guarantee that your client’s basic needs will be secure.
4. https://www.nytimes.com/aponline/2017/06/22/business/ ap-us-gm-ignition-switch-recalls.html 5.http://www.automotive-fleet.com/channel/safety-accidentmanagement/news/story/2017/06/gm-completes-ordermandating-nhtsa-meetings.aspx