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Victim's Fund For GM Ignition Switch Defect Claims

Kenneth R. Feinberg is the administrator of a compensation fund established by General Motors to address the faulty ignition switches in some of its vehicles. Those who suffered injuries or lost loved ones due to the defect can file a claim with the administrator seeking compensation. The administrator then determines what he considers appropriate compensation. If the claimant agrees to the compensation offered, he or she waives any right to sue GM based on the accident suffered.

The compensation fund began accepting applications on August 1. There is no set limit on how much money can be paid out through the fund, but there are limits on which defective GM vehicles are included. After recalling millions of vehicles with defective ignition switches, GM failed to authorize payments for victims of accidents involving the full range of those vehicles. As a matter of financial disclosure, GM reported an estimated cost of $400 million for the fund.

Compensation funds offer benefits and drawbacks for victims of negligence. In some cases, such a fund could be the only viable option for obtaining relief. In other cases, the settlement offered will likely fall far below what could be obtained through litigation. Claimants to the fund face a difficult decision and would be wise to seek legal advice before choosing to pursue relief in this way. While there is little drawback to filing a claim, actually choosing to accept whatever compensation is offered could be disastrous.

Source: New York Times, "Victims of Defective G.M. Ignition Switches Begin Filing Claims," by Bill Vlasic, 1 August 2014

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