Judge Rejects Hyundai, Kia’s Efforts for Quick Lawsuit Dismissal

Hyundai and Kia had hoped for a quick dismissal of the litigation hundreds of insurers brought forth after a spree of vehicle thefts. Instead, U.S. District Judge James Selna in Santa Ana, California, rejected the automakers’ argument for dismissal and ruled Hyundai and Kia must face the insurers’ lawsuits.

The lawsuits in question aim to recoup more than $1 billion that insurers say they owe Hyundai and Kia drivers whose vehicles were damaged or stolen during a theft spree inspired by social media. The insurers argue that the lack of anti-theft devices in the 14.3 million vehicles made between 2011 and 2022 dramatically increased the likelihood of vehicle theft.

Hyundai and Kia argued that insurers assumed the risk of vehicle theft by collecting auto insurance policy premiums.

Selna rejected that argument, writing, “Though [the insurers] have received premiums, defendants allegedly failed to include any anti-theft device as required under federal regulations. Thus, the level of fault is almost entirely on the defendants.”

A lack of immobilizers

Much of the criticism Hyundai and Kia face stems from their failure to install immobilizers in many of their vehicles. These anti-theft devices are common in most vehicles and prevent cars from being hotwired.

TikTok videos showing how to steal vehicles without such a device triggered an avalanche of thefts in 2021. Federal statute states all vehicles must have starting systems that prevent normal activation of the engine if the key is removed from the starting system, according to Federal Motor Vehicle Safety Standard 114.

A broader case

Selna’s ruling is the latest in a string of legal cases surrounding the automakers and the thefts. Hyundai and Kia also face legal challenges from several municipalities and victims in those areas seeking to recoup costs associated with vehicle theft and vandalism.

On Oct. 31, 2023, Selna provided preliminary approval of a class action settlement involving Hyundai and Kia and concerning more than 9 million vehicles. The settlement is valued at $200 million, of which $145 million will go to the drivers themselves.

Other lawsuits remain ongoing.

What’s next?

While the court battles continue, current owners of the Hyundai and Kia models that appeared in the TikTok challenge face a new obstacle — getting insurance.

“Auto insurers, as a result of all the spikes in thefts in those vehicles, stopped writing new business for those policyholders and probably were not renewing policies,” Louisiana Department of Insurance Commissioner Jim Donelon told the Baton Rouge CBS-affiliate WAFB.

Both State Farm and Progressive are not writing or renewing policies for vehicles targeted in the challenge. This includes the Hyundai Accent, Elantra, Kona, Santa Fe, and Veloster. For Kia, the models include the Forte, Optima, Rio, Sedona, Sorento, Soul, and Sportage.

Owners of one of these vehicles may be able to secure coverage again, if that coverage is threatened, by taking their vehicle to their local dealership for installation of an anti-theft software upgrade. The installation of this upgrade is free, and Hyundai and Kia have sent notices for the upgrade to applicable parties through the mail.

However, while this upgrade may allow drivers to secure or maintain their insurance, it may come with higher rates than before the TikTok challenge began.