Details of GM's (NYSE: GM) compensation plan - Automotive | Financial Buzz

Details of GM’s (NYSE: GM) compensation plan

Claims, General Motors, Effort, CompensationGeneral Motor (NYSE:GM) has been actively taking interest in the victims of the defective ignition switches in an effort to gain back public trust.  Kenneth Feinberg, one of the country’s top compensation experts, who oversaw compensation program after 9/11 and the Boston Marathon bombings, was hired by GM to take full control of the plan.

Details of the plan were unveiled on Monday suggesting that there would be no cap on the amount of money GM is planning to pay out, “GM is saying this is an opened-ended program, 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” stated Feinberg at news conference in Washington.

Every victim will be compensated; provided claimants can prove that the incidents were caused by the cars’ ignition switches problem. Specifically, there must be evidence that the air bag did not deploy. The faulty switches shut down the power of moving car, disables the airbag, power steering and brakes, if the air bags inflated, that means the power was on, and the crash was not caused by the switch, which voids a claim.

The compensation checks range from $20,000 to several millions dollars depending on the level of damage. According to the program, the payouts are classified into three categories- death, catastrophic injury and moderate injury. Families of those victims who died immediately received $1 million, plus lifetime earning lost and $300,000 for each spouse and dependent. Those who had less severe injuries requiring hospital treatments receive checks ranging from $20,000 for one night in the hospital, to a maximum of $500,000 for up to 32 nights or more of hospitalization. The plan also offers up to $20,000 for people who weren’t treated in hospitals, provided that the treatment began within 48 hours of the accident. The program is completely voluntary; those who accept the compensation must waive their right to sue the company.

Claims may be filed starting August 1st until December 31st, giving people time to collect evidence and documents. Supporting data may include photos, police reports, car’s black box, insurance data or hospitalization documents. Once a case is accepted; payout is promised to be delivered within 180 days. With victims seeking relief through the program, outside court, GM hopes to limit its legal liabilities, and somehow gains back its public image.