General Motors is taking a lot of criticism for being slow to issue recall notices for models with defective ignition switches. But in many other cases, it's consumers who are slow to respond to recalls, perhaps thinking they're not really important.
But a new study from the Highway Loss Data Institute (HLDI) shows that at least one type of recall corresponds to higher insurance losses -- and finds that the risk goes down after consumers are notified about the need for repairs.
HLDI analysts studied losses from noncrash fires from 2007 to 2012 for vehicles up to 8 years old. They compared the rate of noncrash fire claims for vehicles with a known fire-related defect for which a recall was issued with the rate of claims for vehicles without such defects. Defects that can cause fires include such things as electrical problems or fuel system defects.
They found that in the years prior to a recall, the claim frequency for vehicles with fire-related defects was 23% higher than for other vehicles. After the recall, claim frequency was only 12% higher.
"As one would hope, recalls mitigate the effect of fire-related defects," says HLDI Vice President Matt Moore. "However, even after recalls are issued, these vehicles continue to have higher claim rates. This may be a result of people not following up after receiving a recall notice."
"This study shows that recalls are issued for a reason and they are effective at reducing risk," Moore says. "When you get a recall notice, don't put off the repairs."