Honda Leaving Leaseholders Unclear on Car Insurance in Wake of Takata Scandal

Published: May 12, 2016

Updated: July 24, 2018

Author: Luke Jones

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The Takata airbag scandal has sent shockwaves through the automotive industry, resulting in millions of vehicles from numerous manufacturers recalled due to faulty airbags. However, while car brands are offering affected owners replacement vehicles while the recall happens, many Canadians may not exactly be getting what they are paying for.

In fact, it is arguable that manufacturers are not looking after the customers. As one of the affected car brands, Honda Canada is potentially leaving consumers frustrated by offering them less than favorable conditions for lease replacements. The company is honoring customers by offering rental vehicles to those who have been affected by the Takata airbag callback.

However, drivers of lease vehicles are finding that Honda is offering a deal that is being described as unfair considering the circumstances. The company is offering a replacement rental vehicle to lease holders under the following terms:

  • There is no guarantee that the same class of vehicle will be provided
  • Drivers must continue to make lease payments
  • The called back vehicle cannot be used until the fixes have been made
  • The called back vehicle must be stored by the leaseholder
  • Full auto insurance must continue to be paid

Storing and not using the vehicle until it is called back and fixed is essential, but some of the other stipulations could cause consumer problems. For example, Honda Canada is not guaranteeing leaseholders the same class of vehicle, which means the replacement rental could well be a worse car.

That could possibly be acceptable to some customers, but the fact they must continue to make lease payments on the better vehicle will likely prove to be a frustration. In other words, leaseholders could be driving a lesser vehicle for months but still paying for the lease of the original, possibly better, car.

Honda suggests that the process for recalling a vehicle and fixing the airbag situation will take between five and six months, which means consumers could be paying over the odds for half a year.

“It’s not fair for me to keep making full lease payments on my leased vehicle, while it is being stored … I pay for the brand, and to drive the car, not storing it and wait for it to be fixed.”

This is also the case in terms of auto insurance, with customers forced to pay the full insurance coverage even though they may be driving a lesser vehicle with potentially better premiums:

“It doesn't make sense that I still have to pay for liability coverage for my ILX, since the vehicle will be stored in my garage and wont’ be moved.  These things add up, because we are talking about 5 – 6 months period.”

Car owners and leaseholders now have a big question. If the vehicle is defective or recalled, does regular auto insurance still cover their vehicles properly? Customers must also ask who exactly they need to claim (manufacturer or insurance provider) from in the event of an accident?