GM Announces Compensation Plan for Victims in GM Ignition Switch Recall

By on June 30, 2014 - Comments off

June 30, 2014 – General Motors claims they are prepared to offer compensation, including at least $1 million in compensation for each victim who died in accidents caused by defective ignition switches, under the terms of a victim compensation fund announced today.  Kenneth Feinberg, a lawyer hired by GM to help administer payouts related to the defect, said that for those who were killed or suffered catastrophic injury, the size of the settlement would be based on age, earning potential, medical expenses and family obligations.  He provided a hypothetical scenario in which the family of a 25-year-old married woman with two children who was earning $46,400 a year at the time of her accident would receive $4 million.  According to Feinberg, those who suffered catastrophic injuries could receive considerably more.  Claimants and their lawyers will still be required to prove legally and factually that their injuries were caused by an ignition switch defect. 

Under the compensation plan, claimants must meet the following two requirements to qualify:

  1.  The crash must have involved one of the models the company has recalled for the defective switch


2.  There must be evidence that the air bags did not deploy

The Formula for Less Severe Injuries

The compensation plan sets out the formula for payments to those who were treated for less severe injuries as follows:

  • $20,000 for those who spent one night in the hospital
  • $70,000 for two to seven overnights
  • $170,000 for eight to fifteen overnights
  • A maximum of $500,000 for 32 or more overnight stays at the hospital

Key Details of GM’s Compensation Plan Announcement

Here are important details from today’s announcement:

  • There is no limit on payments to individuals
  • Drivers, passengers, pedestrians and occupants of cars hit by GM vehicles are eligible for payment
  • People who previously settled lawsuits with GM are eligible to file a claim
  • Victims who are satisfied with their claim’s outcome must waive their right to sue GM
  • Feinberg, not GM, will have final say on who is eligible and how much money they will receive
  • People filing claims will have to prove that defective switches caused the crashes

The fund will begin accepting applications Aug. 1 and the application period will close Dec. 31.

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