Auto Insurers Are Refusing to Cover Some Cars Because They’re Stolen So Frequently

At least two major car insurance companies are declining to cover certain Kia and Hyundai models in select locations as authorities report staggering theft rates on the vehicles.

Apparently, the increase in thefts is tied to a series of viral online videos that give tutorials on stealing the cars and have inspired droves of criminals to hot-wire the vehicles. In New Orleans alone, there were more than 1,000 auto theft incidents of Kias and Hyundais last year —a significant share of the 4,400 cars stolen overall in the city.

Not only do owners of these vehicles have to worry about thieves taking off in their cars, they also have to deal with the new reality that auto insurance companies may raise premiums or refuse to insure them altogether.

As reports of car insurers denying coverage for new policies surfaced recently, finger-pointing from the South Korean auto manufacturers and the insurance industry ensued.

What insurance companies are saying

Money reached out to eight of the largest car insurance companies in the U.S. for comment on their response to the rise in thefts of Kia and Hyundai cars — specifically, many of the 2011 to 2021 models including Kia Souls and Sorentos and Hyundai Tucsons and Elantras. These vehicles reportedly lack engine immobilizers and can be stolen with just a screwdriver and a USB cable. Three of the auto insurers (State Farm, Progressive and Nationwide) responded prior to the time of publishing.

• In a statement, State Farm said it “temporarily stopped writing new business in some states for certain model years and trim levels of Hyundai and Kia vehicles because theft losses for these vehicles have increased dramatically.”

• Drivers of affected cars are also being denied coverage for new policies from Progressive in parts of the U.S., and the company has raised insurance rates for some of its new customers, a spokesperson confirmed. “This explosive increase in thefts in many cases makes these vehicles extremely challenging for us to insure,” the spokesperson said.

• Nationwide sent the following statement: “We continue to provide insurance protection for Kia and Hyundai vehicles while monitoring Hyundai and Kia’s response to the increase in thefts.”

• The full scope of how many companies are denying coverage is currently unclear because most haven’t declared how they’re responding, according to Mark Friedlander, a spokesperson for the Insurance Information Institute, an industry trade group. He says other insurance companies are certainly aware of the situation and are likely analyzing options that include raising premiums and declining coverage.

Kia and Hyundai statements on stolen cars, insurance

In statements, parts of which are identical, Kia and Hyundai said they expect the insurance issues to be “temporary” and detailed steps they’re taking to improve the theft defenses of their vehicles.

• The manufacturers also expressed disappointment with the moves by insurance companies to deny coverage: “Kia America regrets this decision by certain insurers and its impact on owners and lessees of select Kia vehicles,” the company’s statement said. (Hyundai used basically the same language.)

• However, Friedlander says it’s not fair to blame insurance companies. “The manufacturers are completely at fault in this situation. They manufactured vehicles in a faulty manner, which are very easy to steal,” he says. “They should not expect insurers to bail them out here.”
• While the manufacturers say the insurance troubles will be temporary, thefts do not appear to be slowing down, as local authorities are raising alarm about the number of incidents so far in 2023.

Bottom line

Insurance companies might be declining new policies or possibly raising premiums in the future in response to the increase in thefts of Kia and Hyundai cars.

Insurance companies have broad authority to deny coverage, raise premiums or refuse renewals, and Friedlander says the magnitude of this issue is forcing underwriters to think through these options.

People seeking insurance for the affected cars are already encountering challenges. And because insurance agreements are often only for six-month terms, even drivers of affected models who have insurance could soon have to pay higher premiums when it’s time for their next renewal.

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