'A serious problem': Big South Korean auto firms face heat as State Farm, Progressive now refuse to cover certain models — here’s why these cars are too risky to insure
Two of Korea’s most recognizable car brands are now the subject of a class-action lawsuit.
Filed in the Eastern District of Wisconsin court on Feb. 17, the suit seeks damages and injunctive relief for car owners whose Kia or Hyundai came designed without a key security feature that helps prevent them being stolen.
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The suit specifically calls out the role a viral TikTok challenge played in an “explosive” spike in car thefts in recent years. The social media trend saw thieves hotwiring certain Kia and Hyundai cars and SUVs using nothing but a USB cord — and if they were feeling fancy, a screwdriver.
It’s the very same challenge that spurred State Farm and Progressive to announce they’re now refusing to insure select models made by the big South Korean auto firms due to how easy they are to steal.
“[This is a] serious problem impacting our customers and the entire auto insurance industry,” State Farm said in a media statement.
Which models are impacted?
The Kia and Hyundai models being targeted by TikTok thieves were released between 2011 and 2021.
According to 2021 insurance claims records from the Highway Loss Data Institute (HLDI), Kia and Hyundai models from 2015 to 2019 are roughly twice as likely to be stolen as other vehicles of similar age.
What makes them so easy to steal is that many of them lack a basic theft prevention technology called an electronic immobilizer, a tool that stops the engine from starting unless the correct key is present.
Immobilizers can be found in 96% of vehicles sold for the 2015 to 2019 model years, according to the HDLI, but only 26% of Kias and Hyundais had them at the time, leaving them vulnerable.
Without an immobilizer, anyone can break into a car and bypass the ignition with ease, the HLDI said. And they don’t need to be a professional car thief to succeed — they just need TikTok.
The class-action suit in Wisconsin claims both Kia and Hyundai “have long known or should have known of the defect” in their cars. It goes on to state that instead, the manufacturers “failed to disclose and actively concealed the defect from the public, and continue to manufacture, distribute, and sell the vehicles without disclosing the defect.”
While Kia and Hyundai are now both working on providing free software updates to get in front of the issue, the plaintiff in the suit (whose car was stolen in 2021) believes the companies held off on implementing that software update before “as a cost–saving measure to improve their profitability.”
However, the number of thefts recorded before the update was issued is alarming. The Chicago Police Department warned of an “astounding 767%” increase in vehicle thefts in 2021 due to the TikTok challenge.
And in Los Angeles, Kia and Hyundai vehicles accounted for almost 20% of vehicle thefts in 2022, up from 13% in 2021, according to the Los Angeles Police Department — both staggering figures considering how many car brands are available on the market.
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Too risky to insure
Comprehensive car insurance coverage will typically cover theft, as well as repair costs from break-in damages.
This means that insurers are picking up the bill for this unfortunate TikTok trend — and for State Farm and Progressive, enough is enough.
“This explosive increase in thefts in many cases makes these vehicles extremely challenging for us to insure,” said Progressive spokesman Jeff Sibel in an emailed statement to CNN.
“During the past year we’ve seen theft rates for certain Hyundai and Kia vehicles more than triple and in some markets these vehicles are almost 20 times more likely to be stolen than other vehicles.”
In response, Progressive has “limited” its sale of new insurance policies on specific Kia and Hyundai models, while also increasing the price of coverage for these cars.
State Farm has made a similar move to “temporarily stop writing new business in some states for certain model years and trim levels of Hyundai and Kia vehicles,” but the insurer hasn’t yet confirmed which cities or states are impacted.
What should you do if you own a risky model?
Police have issued many tips on how to protect vehicles that are at high risk of theft.
Simple things like using a steering wheel locking device, keeping valuables out of sight and parking in a well-lit and well-traveled area can go a long way to preventing theft.
You might also consider installing alarm systems, anti-theft dash cams and vehicle tracking systems to deter thieves and increase your chances of finding your car if it’s stolen.
It’s important to remember that State Farm and Progressive are only limiting their sales of “new” insurance policies for high-risk Kia and Hyundai vehicles.
If you own one of these vehicles and already have insurance in place, taking steps to secure your vehicle and limit the risk of theft could help to control your insurance costs.
Other ways to control your insurance costs
On average, Americans pay $1,553 a year on auto insurance. And while coverage is legally required in most states, overpaying for insurance isn’t.
So even if your insurer isn’t threatening to revoke your coverage, if you haven’t cruised through your options lately, you could be overpaying by as much as $500 a year on this essential policy.
Your best chance to find savings on your auto insurance is to spend some time shopping around and comparing offers.
Typically, that might mean setting aside hours — or even a whole day — to call up different insurers just to provide them with your details to get an accurate quote. But with today’s comparison sites, in as little as three minutes, you can find the best deals on auto insurance all in one place.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.