HomeCar InsuranceAfter Kia-Hyundai Lawsuit, Still Hard to Get Car Insurance

After Kia-Hyundai Lawsuit, Still Hard to Get Car Insurance

Kia and Hyundai recently agreed to a $200 million class-action payout filed because some of its vehicles were too easy to steal, yet the owners of affected cars appear to still have a big problem: finding affordable auto insurance.

The two Korean automakers agreed to a $200 million settlement last week that will compensate people whose vehicles have been stolen or damaged, but the agreement doesn’t resolve all the problems for owners of the affected cars.

Some Kia and Hyundai drivers are still being denied car insurance or charged higher premiums because of the staggeringly high incidences of theft of many of the automakers’ vehicles produced between 2011 and 2021, including the Kia Soul and Sorento and the Hyundai Tucson and Elantra. (Hyundai is a parent company of Kia and owns about a third of the business.)

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Insurance problems for Kia and Hyundai cars

For more than a year now, thieves have been exploiting security vulnerabilities of these vehicles. The affected cars lack engine immobilizers and could be stolen with just a screwdriver and a USB cable.

In January, reports began to emerge of major auto insurance providers raising premiums or declining to issue new policies to drivers of select Kia and Hyundai models because they didn’t want to take on the heightened risk.

And it appears the new $200 million settlement proposal, which has yet to be finalized, will do little to address these problems. While theft victims could get up to $6,125 as a result of the litigation, vehicle owners are not going to be compensated if their insurance was hiked but their cars weren’t stolen or damaged.

“As theft rates continue to escalate across the U.S., more auto insurers are placing moratoriums on writing new policies for owners of at-risk Hyundai and Kia vehicles,” says Mark Friedlander, a spokesperson for the Insurance Information Institute, an industry trade group. “Further, many vehicle owners are reporting their policy renewal premium has increased significantly.”

There’s no available data about how much more Kia and Hyundai drivers are now paying for insurance. We do know, however, that auto insurance is generally getting more expensive for Americans. Motor vehicle insurance prices are up 15.5% in the past year, far exceeding the overall inflation rate of 4.9%, according to the latest consumer price index report.

Auto insurers are raising rates or declining new coverage

In January, State Farm told Money it was declining to cover Kia and Hyundai models in parts of the country due to the dramatic increase in theft losses. On Tuesday, spokesperson Gina Morss-Fischer confirmed that State Farm’s halt on writing new policies remains in effect.

Progressive previously said it was taking similar measures, but did not respond to Money’s requests for an update on how the company is approaching policies for affected cars now. Progressive explained in January that it was raising rates for existing customers and denying coverage for new policies because the theft issue “makes these vehicles extremely challenging for us to insure.”

For the past three months, Kia and Hyundai have been rolling out software upgrades that can prevent some of the affected cars from being hotwired by thieves, many of whom reportedly learned how to steal these cars from TikTok videos.

Hyundai says the upgrade takes less than an hour but must be completed at a Hyundai dealership. After the upgrade is complete, drivers get a sticker for their car indicating anti-theft protection is active.

The upgrade, however, is voluntary, and millions of cars haven’t gotten it yet. Kia reports that it has installed the update on 210,000 of 4.5 million vehicles that are vulnerable, while Hyundai has completed 225,000 installations out of 3.8 million vehicles, according to the Associated Press.

With so many vehicles lacking the upgrade, the pace of thefts doesn’t seem to be slowing down. In New York City, officials report that 966 Hyundais and Kias were stolen in the first four months of the year. In Minneapolis, officials say they’ve received 1,978 theft reports of Kias and Hyundais so far in 2023, according to CBS News.

In a statement after the settlement was announced, Kia and Hyundai acknowledged there is more work to be done and said they are collaborating with law enforcement to “combat car theft and the role social media plays in encouraging it.”

When will auto insurance get cheaper?

The insurance issues will only go away if the thefts slow down, a representative for the American Property Casualty Insurance Association (APCIA) told Money. Otherwise, insurance providers will factor the elevated risk into their pricing and their willingness to provide coverage at all.

“If you own a vehicle that for whatever reason is much more susceptible to some type of covered loss than others, then the prices are going to be higher,” says Bob Passmore, the APCIA’s department vice president of personal lines. “When those theft losses and vandalism losses come back in line with what other vehicles experience, that’s when those vehicle owners might see some relief.”

Attorneys at Hagens Berman, the law firm that filed the class-action lawsuit against the automakers which resulted in the settlement agreement, told Money they are “hopeful” Kia and Hyundai drivers will at some point experience fewer insurance issues.

They said the software upgrades could gradually reduce the number of thefts as more drivers get them installed, which would mean it’d be less risky for insurers to cover Kias and Hyundais.

Additionally, the attorneys noted that dozens of insurers are separately pursuing their own litigation against the automakers. But it’s not clear if those cases will be successful or if insurance customers would necessarily benefit if they are.

If you own a Kia or Hyundai and your insurance company hikes your premium, Passmore encourages shopping around for a better policy. While some companies are going to be wary of covering these vehicles, others may be willing to take on the risk if it means getting a new customer from a competitor.

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