General Motors will pay out millions in compensation to victims and their families of crashes related to faulty ignition switches.
Kenneth Feinberg, the independent administrator GM tasked with handling compensation claims, announced the company’s plan and spoke to the families of crash victims today. The Detroit automaker is setting aside an uncapped compensation fund to pay claims to affected families.
To date, General Motors links 13 deaths and 54 crashes to defective ignition switches that are behind the recall of 2.6 million vehicles. The switches might slip from the “on” position into accessory or off, disabling the airbags. GM will pay out $1 million to the families of crash victims that died in an affected General Motors vehicle. Additionally, the company will pay $300,000 per surviving spouse, $300,000 per surviving dependent and an additional sum for calculated economic loss.
GM is also building three tiers into its compensation structure. The first is for death, the second for catastrophic injuries including permanent brain damage and paralysis and this third is for less serious injuries.
GM has received roughly 3,500 claims, many of which Feinberg said are without substantial evidence. As an example, Feinberg said a 25-year-old victim with two children and an annual income of $75,000 who died in a crash would merit a claim of $5.1 million.
Families accepting compensation from GM will not be asked to sign a gag order or non-disparagement agreement, Feinberg, who also handled compensating families of September 11 victims, said today. General Motors also doesn’t have the authority to reject or challenge payouts that Feinberg authorizes. Once the compensation program comes to an end, he said summary data on the payout will be released.
“We are pleased that Mr. Feinberg has completed the next step with our ignition switch compensation program to help victims and their families,” General Motors CEO Mary Barra said in an official statement today. “We are taking responsibility for what has happened by treating them with compassion, decency and fairness. To that end, we are looking forward to Mr. Feinberg handling claims in a fair and expeditious manner.”
Initially, the compensation plan didn’t include a provision to pay out victims with less serious injuries but after push-back from lawyers, claimants categorized in the third tier will receive $20,000. Letters will be send to current and former owners of the 2.6 million vehicles being recalled.
Discuss this at our General Motors Forum.