Pennsylvania Insurance Department: Auto Policy Premiums Likely Unaffected by Vehicle Recalls

HARRISBURG, Pa - March 16, 2010: Pennsylvania Insurance Commissioner Joel Ario addressed how auto recalls may impact insurance coverage and urged consumers to respond to recall notices from vehicle manufacturers.

"Each week, we learn more about safety problems with certain vehicles, raising many consumers' concerns about how that might impact their own auto insurance," said Ario. "Insurance companies cannot cancel coverage or deny a claim because you drive a recalled vehicle. However, consumers are encouraged to respond to recall notices by having your car serviced."

Vehicle recalls occur fairly regularly and auto insurance companies know how to manage these events. While insurance policies are unlikely to change due to a recall, if consumers fail to respond to a recall notice and do not have the vehicle serviced, an insurance company may consider that negligence and a contributing factor to an accident. The insurer could also surcharge or refuse to renew a policy based on the claims pay-out.

When setting rates, most insurance companies use vehicle model rating as one component of a premium. This allows companies to track performance and safety aspects of vehicles, such as the cost to repair, how well the vehicle performs in safety tests and how easily the vehicle could be stolen, to name a few.

It is possible for an insurance company to re-file with the department their model ratings based on a vehicle recall. To date, that has not occurred for the recently recalled Toyota vehicles. Also, if Toyota successfully replaces all the parts in all the affected cars, then nothing may change at all. If rates did change, it would affect only the comprehensive and collision parts of a policy.

For more information about auto insurance, visit www.insurance.pa.gov or call the department's toll-free, automated consumer hotline at (877) 881-6388, or either of the department's Bureau of Consumer Services' regional offices: Harrisburg at (717) 787-2317; or Philadelphia at (215) 560-2630.