GM announces proposed settlement plan; offers payments for accidents

GM will pay more than $1 million to the families of those killed in accidents involving recalled cars

Most of General Motors’ (GM) ignition switch legal problems thus far have dealt in hypotheticals, questions and internal shakeups. But now, the company is seeing the first effects of its issues on the bottom line, revealing a compensation plan on June 30 that sees them offering more than $1 million to the families of those who died as a result of faulty cars.

Kenneth R. Feinberg, a compensation expert hired by GM, has revealed a settlement program that is intended to compensate those injured — or worse — by the vehicles affected by faulty ignition switches. Feinberg said the company will offer checks ranging from $20,000 to over $1 million for those who were hurt in a crash involving one of GM’s 2.6 million recalled cars. There is no cap on this settlement.

For the families of those killed in a crash involving a recalled car, the company will pay at least $1 million, plus an added calculation of lifetime earnings and an extra $300,000 for a spouse and each dependent.

“GM is saying this is an opened-ended program,” Feinberg said in an interview with The Wall Street Journal. “This is important because I don't want a claimant to think he or she is getting less because there is a limited pie of money. GM will pay as we go. There is no cap on the aggregate amount of money.”

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However, there one is caveat. Feinberg said that if an air bag deployed over the course of the crash, showing that the car was in fact still on, “you’re out.”

Feinberg said that he expects people to be skeptical of the announcement, especially because of the past evidence that GM has hidden information related to the ignition switch issues. But this time, however, he said he has a plan to atone for the company’s past mistakes.

“People will understandably be skeptical,” Feinberg said to the New York Times. “The only way you solve that problem is to get the money out fast and in a generous fashion. There is no substitute for getting the money out.”

GM hopes that this settlement program will cause the large host of class action suits to instead settle through this program. Feinberg said that claims may be filed between Aug. 1 and Dec. 31, and the company hopes to have all checks mailed by the middle of next year. 

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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