State Farm insurance sues Ford Motors over use of defective ignition switches Carmaker is accused of hiding fire hazard from officials, customers

January 21, 1998|By NEW YORK TIMES NEWS SERVICE

State Farm, the nation's largest auto insurer, sued Ford Motor Co. yesterday, charging that the automaker installed defective ignition switches in 26 million cars and withheld information about the potential fire hazard from federal officials and customers.

The federal lawsuit, an unusual display of public rancor between the insurance and auto industries, seeks to recover millions of dollars that State Farm has paid to repair fire damage to its customers' cars.

It also hopes to recover deductibles of up to $1,000 absorbed by policyholders.

Ford had acknowledged the problem two years ago after scores of fires were reported. The automaker recalled 8.7 million vehicles it built from 1983 to 1993.

A lawyer for the company, denying State Farm's allegations, said yesterday that the recall had remedied the problem.

But State Farm contends that Ford should have replaced the switches in all of the 26 million vehicles in which they were installed and that millions of cars with the potentially hazardous parts remain on the road.

The insurance company said thousands of fires had started in Ford vehicles because of the switches, sometimes destroying garages and houses as well as the vehicles. No deaths were reported.

Ford, in issuing its recall order in 1996, said that at least 30 people had been injured, two seriously.

In its lawsuit, filed in U.S. District Court in Los Angeles, State Farm maintained that Ford knew of the defect in the ignition switch as early as 1988 and began working on a safer design in 1991 along with the switch's manufacturer, United Technologies Automotive, a division of the Hartford, Conn.-based United Technologies Corp. The United Technologies unit also is named as a defendant in the suit.

But State Farm said Ford continued to install the defective switches in new models until 1993 and repeatedly withheld information about the problem from investigators of the National Highway Traffic Safety Administration.

John F. Harris, a lawyer for Ford, said it was "simply not true" that the automaker had withheld information about the switches from either federal investigators or customers. He also rejected State Farm's assertion that the entire production run of 26 million Fords from 1983 to 1993 represented a fire hazard.

"What we found is a small number of switches installed in certain vehicles have experienced short circuits leading to fires," Harris said. "We do not believe all the ignition switches are defective."

Lin Cummins, a spokeswoman for United Technologies Automotive, referred all questions to Ford.

In Washington, Timothy Hurd, a spokesman for the National Highway Traffic Safety Administration, said the agency had not seen State Farm's lawsuit, but "will be looking into the allegations."

In its suit, State Farm said that Ford made "incomplete and misleading statements" to the federal agency in the course of four separate investigations of the fire hazard, hoping it would conclude that no serious problem existed with the switches.

Ford, the insurance company said, asserted that there was "no common source or cause explaining" the fires. But the State Farm suit states that internal Ford documents show that the automaker was "well aware in making these statements that the assertion was false."

Neither Ford nor State Farm would say precisely how many vehicle fires could be attributed to the defective ignitions.

Pub Date: 1/21/98

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