Fisker’s Woes Continue

FiskerKarma
FiskerKarma

Fisker Automotive, the makers of the ultra luxurious sedan nicknamed the Karma, has had tragedies experienced one after the other. Because of the series of misfortunes that has befallen the car manufacture, one now seems to wonder as to the wisdom of naming its maiden vehicle as the Karma.

One of the most recent disasters the company has been with Hurricane Sandy, where 338 of their Karmas were lost when the Port of Newark was flooded. The vehicles, after being submerged, caught fire, resulting in the total loss of the luxury sports cars.

In a recent turn, the insurer of these Karmas is refusing to pay for the lost vehicles, leaving Fisker with no choice but to seek damages in court. According to reports, Fisker Automotive’s policy with insurer the XL Group PLC allows entitlement of up to U.S. $100 million for damages occurred through named storms, an example would be Hurricane Sandy. This amount though is still subject to a deductible and other provisions in the policy. The value of the lost Karma vehicles then housed at the port at the time of the storm totaled U.S. $33 million.

The bone of contention for the refusal of the claim is the determination whether or not the vehicles are considered ‘in transit’. The said vehicles were awaiting shipment to dealers at the time of the loss.

When the vehicles are considered as such, then other provisions and sublimits as to the indemnity applies. Fisker alleges that the insurer must cover the loss, as well as breach of contract for their refusal to pay the amounts stipulated in the insurance policy. The case was filed in the New York State Supreme Court in Manhattan.

When Hurricane Sandy hit the Port of Newark in New Jersey, there were more than 10,000 vehicles currently in storage. The amount of the loss is considered as the second costliest in U.S. history after only the swath of damage caused by Hurricane Katrina.

This is just one of the problems that Fisker Automotive has experienced in 2012, such as fires in its vehicles, production recalls and delays, funding issues, poor reviews of its Karma, and massive layoffs of its personnel. The lukewarm response by the market of the U.S. $100,000 plug-in hybrid vehicle does not help its cause one bit. Its follow up vehicle named the Atlantic has sputtered in production because of financial shortcomings for the company.