Product News and Recalls

GM Details Plan for Compensation Fund for Victims of Defective Ignition Switches

Late last month General Motors announced its compensation plan that will offer payments to victims who were in an accident in which the air bag failed to deploy as a result of a defective ignition switch. The fund may also offer compensation to victims who previously accepted out-of-court settlements that occurred prior to the recall.

After an internal investigation, GM recently faced congressional scrutiny over a decade-long delay to recall 2.6 million cars with faulty ignition switches, during which the compensation fund was announced. GM has admitted that 54 crashes and 13 deaths were related to the ignition switches in the 2.6 million cars recalled. The company is still under investigation by the Justice Department.

The defective ignition switch can be jarred out of the “run” position, which deactivates power steering, power brakes, and air bags. In order to receive compensation from the fund, claimants must show through photos, police reports, vehicle data from the car’s data recorder, or insurance data, that the air bags did not deploy during the crash.

There is no ceiling or cap to the fund, and GM has admitted they do not know the number of victims, either drivers, passengers, or pedestrians, that they will compensate. The automaker has agreed to pay all claims, even accidents that occurred before it filed bankruptcy in June 2009. However, the company has announced the recent recall of 8.23 million vehicles over more defective ignition switches will not be included in the fund. There have been seven crashes and three deaths so far linked to that recall.

The compensation fund breaks down payments into three categories: death, catastrophic injury and moderate injury. Death cases will be given $1 million automatically, plus $300,000 to spouses, $300,000 to each dependent, and any additional compensation. Catastrophic injury cases can take the “presumptive compensation” route, in which they receive the economic average for what that person would have made over the course of their lifetime. Moderate injuries cases can receive between $20,000 and $500,000, depending on how long the victim was in the hospital. If a victim was injured but did not require hospitalization, they can receive up to $20,000 for the medical treatment resulting from the accident.

Any out of court death settlements related to the faulty ignition switches can be refiled. The program is completely voluntary, but those who accept to receive compensation from the fund may not then sue the company. Those who do not want to participate may still file lawsuits against GM. The claim period runs from August 1 to December 31.

If you have suffered a serious injury in an accident caused by an auto defect or claim economic damages as a result of GM’s recalls, you may be entitled to receive significant compensation by the auto manufacturer for your injuries. The attorneys at Lopez McHugh, LLP are prepared to assist in such lawsuits.