The widespread theft of vulnerable older Hyundai and Kia models not equipped with a crucial anti-theft device could end up costing the U.S. insurance industry up to $600 million.
Liberty Mutual, Nationwide, American Family and 65 other auto insurers, which comprise only a fraction of the country's insurance companies, estimate that just their portion of the payout to owners who have been affected by the social media-driven crime wave could top $300 million.
The insurers, who filed a lawsuit in U.S. District Court in Orange County, Calif., in March, say they have already paid out $190 million. They are demanding that Hyundai Motor America, Hyundai Motor Co., Kia America and Kia Corp. reimburse them for funds paid to owners for replacement or repair of damaged or stolen vehicles.
The lawsuit said repairing broken windows and busted steering columns resulting from an attempt to break into a vehicle and hot-wire its ignition often costs an insurer more than $3,000.
It also said vehicles taken on joyrides and used to damage public property or commit other crimes can incur damages of over $10,000.
And if the vehicle is not recovered, it becomes a total loss and can be as much as $20,000.
"Hyundai believes this litigation is unnecessary," the automaker said in a statement. "A subset of Hyundai vehicles on the road in the U.S. today — primarily 'base trim' or entry-level models — are not equipped with push-button ignitions and immobilizing anti-theft devices. It is important to clarify that an engine immobilizer is an anti-theft device and these vehicles are fully compliant with federal anti-theft requirements."
But the lawsuit illustrates how problematic the hot-wiring problem is becoming for Hyundai and Kia. What began last year as a prankish TikTok video showing how easy it is to steal one of the vehicles has evolved into a nationwide legal headache with consumers, municipalities and now insurance agencies suing the automakers.
Alex Gerwer, a resident of Long Beach, Calif., told Automotive News that his daughter's 2019 Hyundai Tucson was stolen from outside their house in the early morning hours in April.
After the vehicle was deemed unrecoverable by police, their insurance company, Geico, offered a payout of $23,000. Gerwer said in an email that the amount does not "replace the car with any similar model."
He also noted it does not reimburse the two years left on the $1,300 warranty purchased with the vehicle.
Despite the legal actions against Hyundai and Kia by the insurance companies, Gerwer said any award won't go where it should: "to the victims of Hyundai's gross negligence."
No one, he said, "will get the car that they wanted and out of which they were cheated."