By Angelo Young - General Motors Company (NYSE:GM) will pay at least $1 million for each death linked to the fatally flawed ignition switch that was the focus of a 2.6-million-vehicle recall in January and linked to at least 13 deaths and 54 accidents.
The company will also pay $300,000 to each surviving spouse or child, plus an additional sum based on the economic value of each life lost.
“GM understands," Kenneth R. Feinberg, the renowned compensation expert hired by GM to oversee claims related to the defective part, told journalists at a Monday morning press conference in Washington D.C. “GM wants to do the right thing and the right thing is paying people who can document their claims, and that’s a challenge. I would not dare estimate how many deaths or how many injuries until people file their claim and we evaluate the claim.”
Feinberg says there could be hundreds or even thousands of claims from people harmed by crashes that occurred when older GM sedans containing the faulty part lost power while in motion, which in turn led to situations in which air bags failed to deploy.
The company posted its protocol document online outlining the procedure for filing claims. Some of the more important details include:
Feinberg says that GM will not invoke its so-called bankruptcy shield for any claims related to accidents that occurred before the company emerged from bankruptcy on July 10, 2009. Previously, GM had not ruled out using its Chapter 11 reorganization protection, which absolved if from all previous product liabilities as a way to skirt paying claims.
Any victims who had previously settled with GM can reopen their case even if they had previously signed a release after settling with GM. 10 older GM models, mostly Cobalts and Saturns, are included among the cars eligible for GM’s compensation plan. But they exclude other cars identified as having ignition switch problems, including 510,000 recent Chevrolet Camaros and 3.4 million Impalas. Claims will be accepted between Aug. 1 and Dec. 31, and claims that are honored will be paid within 60 to 180 days. Any injury or fatality linked to the ignition switch failure will be considered a legitimate claim. GM’s 13-death tally excludes back-seat passenger fatalities. Any claim involving front-seat air bag deployment will likely be rejected because the deployment is proof the car had power when it crashed. However, they will review on a case-by-case basis some crashes in which although the power steering was disabled, the air bag might have deployed. GM retains the right to challenge Feinberg’s conclusions, but Feinberg says he has final say on any claim.