"It will be done through cash on hand, no insurance." – David Roman, GM's director of financial communications.

General Motors has committed to paying all of its ignition-switch claims out of its own pocket. David Roman, the company's director of financial communications, told Business Insurance, "It will be done through cash on hand, no insurance."

It's not entirely clear how much damage the out-of-pocket compensations will do to GM's wallet, although families of those killed are eligible for $1 million, at minimum. The final number, Roman said, is up to Kenneth Feinberg, the man in charge of formulating the unlimited claim structure. "There's no cap on it," Roman said. "Mr. Feinberg will have the final determination on numbers."

The move to avoid liability insurance should do some good for the company's tattered reputation, following the recall of 29 million vehicles and the deaths of at least 13 people. "They've arguably made one of the best strategic moves for reputation restoration. It will be expensive, but it beats the alternative," Nir Kossovsky told Automotive News. Kossovsky is the CEO of Steel City Re, a company that that specializes in corporate reputation management.

Another consultant group, Hawthorn Group LC, echoed that opinion. "A company almost has no choice but to go this route. I think it's the right thing to do even from a cost/benefit standpoint. Years of litigation could be more harmful to the company and even more expensive," Larry Walsh, a vice chairman at Hawthorn, told AN. "It seems to me a smart way to go. It is trying to reach out to people directly, deal with them honestly."

This may be a good PR move, but with the sheer number of potential claimants, not to mention outside lawsuits from those who don't choose to settle, it will be interesting to see the long-term effects that this strategy has on GM's bottom line.


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  • 23 Comments
      nocommie22
      • 5 Months Ago
      One must be mentally ill to buy anything coming out of Detroit and if you are one of those hillbillies that beats their chest screaming "I only buy 'Murican!" then buy a Honda or Toyota which are now even more 'Murican than the Junk Three.
        Alfonso T. Alvarez
        • 5 Months Ago
        @nocommie22
        YEAH!! I mean come on - sales of GM, Ford and Chrysler are far, far below those of other brands in the US, right? Oops, they're not - GM sells more vehicles than ANY OTHER OEM in the US and is number two in the world in sales. There aren't that many hillibillys in the universe you pathetic little troll ... BTW, GM Ford and Chrysler all employ multiple times as many people in the US than ANY of the foreign based brands
          Alfonso T. Alvarez
          • 5 Months Ago
          @Alfonso T. Alvarez
          @ normc32 - Yet again you show just how pathetic you are - NO ONE cares what you post and EVERYONE knows that you make multiple logins to try to make it appear that you have some kind of support - but NO, YOU DON'T!
          normc32
          • 5 Months Ago
          @Alfonso T. Alvarez
          Another "post of the day award" to the same article? You are a one man automobile lboggers!
          Tariff The Imports
          • 5 Months Ago
          @Alfonso T. Alvarez
          And all those sales didn't save them from bankruptcy or tax payer bailouts from 2 countries. It's profits, not sales, that matter. And much smaller Ford out profits GM every year since the recession all while sell much less. Ford out profits both Chrysler and GM added together.
          normc32
          • 5 Months Ago
          @Alfonso T. Alvarez
          Nope.. just one login for me. --:-D
        Larry Litmanen
        • 5 Months Ago
        @nocommie22
        Dude, only liberals buy GM products because they feel like every time they touch their car it's like they touch 0bama.
          cruzer
          • 5 Months Ago
          @Larry Litmanen
          @Larry I don't know any liberals who drive GM cars. They all drive foreign brands and hate GM. Everytime I've talked to a liberal friend of mine they say GM is junk. And @nocommie22: I'm one of those hillbillies and PROUD OF IT! Honda and Toyota more American? Maybe to you but to us hillbillies they aren't! Honda and Toyota are made by a companies who aren't even American! No we hillbillies like to drive real American cars. You know Chevy and Fords happen to be our favorites.
          protovici
          • 5 Months Ago
          @Larry Litmanen
          Or when they make sweet love to it.
      EvilTollMan
      • 5 Months Ago
      I'll listen when GM employees directly responsible go to jail for involuntary manslaughter.
      normc32
      • 5 Months Ago
      13 deaths plus one already settled out of court. The black data says .GM won't be paying much more in turnout of court as all of those deaths were negligent with high speeds and off road events. Add in alcohol and no seat belts for the iicing the cake.
      R.t Voll
      • 5 Months Ago
      The vote flipper has been here too.. Come on autoblog. DO SOMETHING!
      bullitt2605
      • 5 Months Ago
      I didn't approve them spending the cash I gave them as a tax payer. WTF!!!!
        Alfonso T. Alvarez
        • 5 Months Ago
        @bullitt2605
        All twelve cents from your paper route? WTF!!
        That Guy
        • 5 Months Ago
        @bullitt2605
        Then why did YOU give it to them? You people seriously need to let this go. Don't blame GM for our GOVERNMENT giving them the money.
      ChaosphereIX
      • 5 Months Ago
      who cares...let it go this is not news anymore...
      That Guy
      • 5 Months Ago
      The families should get NOTHING. GM didn't force these people to drive under the influence our without a seatbelt.
      • 5 Months Ago
      The patent they are using is over 125 years old, and they still can't get it right... It's a Nikola Tesla patent #609250 of 1898 "electrical igniter for gas engines" or "starter". Tesla also patented the alternator, spark plug, distributor, voltage regulators, transformers and your speedometer. http://www.teslauniverse.com/nikola-tesla-patents-609,250-electrical-igniter
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