Some Insurance Companies Reject Cars, But Dealers Keep Selling Them: NPR

Before going car shopping recently, Reina Garcia did her homework.

She was interested in purchasing a used Kia Forte from a local dealership near her home in Aurora, Inc., but had heard of a wave of thefts across the country involving some Kia and Hyundai vehicles. I asked the salesperson if the 2020 model she wanted was affected.

“His response was something like, ‘Well, this car is a push-button, so you should be fine,'” Garcia said in an interview with NPR.

The deal is done, and Garcia and her teenage daughter start driving.

They discovered the problem only weeks later: Garcia added Forte to her Allstate insurance policy via the company’s mobile app while she was at the dealership, but when I followed up later, I learned that the company was refusing to cover Forte because of the high rate of thefts.

Garcia and an insurance broker tried dozens of other companies, but they all refused coverage. She said she made her situation clear to the agent and tried to sell the Forte back to them, but their offer would have left her with a $7,000 loss.

“I feel very vulnerable. I feel like I’m being taken advantage of by a dealer. I feel like this is their industry, and they should be aware of this. I’m also very frustrated with the insurance industry,” Garcia said. “All of those things collided, and I think the consumer is definitely caught in the middle.”

officials say More than eight million Hyundais and Kias From 2011 to 2022 they can be connected using a USB cable and lack engine immobilizer, a common anti-theft feature that prevents the engine from being started unless the car key is nearby. They are increasingly becoming targets for thieves.

Both manufacturers are offering affected customers free software upgrades that they say will fix the problem, but cars affected by the vulnerability are still on the market, despite the fact that a growing list of major insurers say they won’t cover them for now. Most states require drivers to have auto insurance to be on the road.

Consumer advocates say the blame lies with several players—automakers that omit anti-theft features on certain models, dealers who continue to sell damaged vehicles, insurance companies that refuse coverage—but it’s the drivers who are stranded.

“People can’t necessarily go and buy a new car,” Douglas Heller, director of insurance for the Consumers Federation of America, told NPR. “There are a lot of people who can only afford to buy a used car, and that affordable car that’s probably very typical when it comes to taking a risk.”

A hack spread on social media

during the past two years, The videos appeared on TikTok From people who show how to steal some Hyundais and Kias with a key ignition. Thieves can remove the steering column cover and power the car with a USB cable or something similar.

Since these models also do not have the engine mounts, the thief is able to start the car and drive away without a key. About a quarter of 2015 Hyundai and Kia series have standard fasteners, compared to 96% of all other makes, According to the Highway Loss Data Institute.

Since the social media trend has gained popularity, thefts of these vehicles have skyrocketed. in Minneapolis last year, Thefts of Kias and Hyundais have ballooned 836% over the previous year. Federal regulators said earlier this year that eight people have died in 14 TikTok challenge-related incidents.

In April, a group of state attorneys general called for a national recall of damaged vehicles, saying thefts create a “safety crisis” on American roads, but the National Highway Traffic Safety Administration has yet to get going.

But the insurance companies took action. It has been announced that many customers will not take new customers with vehicles that have these vulnerabilities.

Allstate, Progressive, and State Farm all confirmed to NPR that they do not issue new insurance policies in some states for some Hyundai and Kia vehicles because of the high risk posed by thefts. Existing customers will retain their coverage.

“Insurers are in the business of taking on new customers, so this is a very unusual circumstance,” said Michael Barry, chief communications officer at the Insurance Information Institute, an industry group.

“But theft rates for some Hyundai and Kia vehicles are so high that a number of brand name insurers—to protect their bottom line as well as those of other policyholders—have decided to temporarily stop accepting new policyholders,” he told NPR.

The companies haven’t mentioned the specific models they won’t cover, however WWL-TV reported in New Orleans State Farm has been pausing coverage of some popular cars, including Hyundai’s Elantra and Tucson, and Kia’s Optima and Sportage.

Hyundai says software repair for its cars is currently available at all of its dealerships nationwide, while Kia says so He keeps asking for his promotion. It is unclear how many customers have received software patches so far.

In mid-April, Hyundai also announced that it had done so Partnership with AAA insurance companies In a program to offer insurance plans to people who have purchased theft-damaged cars. Kia spokesman James Bell told NPR that the company is also working with insurance companies on a solution.

“Kia America regrets the decision of some insurance companies and its impact on owners and renters of select Kia vehicles, which we expect will be temporary,” he said in an emailed statement. “We are in contact with the major insurers, so they are aware of the measures we have taken and are actively working with them to ensure that our customers receive high-quality, comprehensive coverage.”

Loopholes still leave some car buyers behind

Auto insurance is regulated by state governments, and some have noticed insurance companies pausing coverage for some Hyundai and Kia vehicles.

Maryland Department of Insurance issued a prospectus In February, reminding companies that they must insure vehicles at rates they have submitted to the state, and that refusing to do so could be a violation of state law.

Reyna Garcia said that when she bought Forte in early April, the dealership only confirmed that she had an auto insurance policy with Allstate, but did not confirm that Allstate had accepted Forte into the policy before they let her leave with the car.

When contacted by NPR, Allstate said through a spokesperson that it was contacting Garcia “to apologize for the outage.” The company also said that liability coverage is available for affected vehicles in Colorado but comprehensive and collision coverage is not.

The dealership where Garcia purchased the car did not respond to a message left by NPR.

Experts say potential buyers should check with their insurance company before buying a used Hyundai or Kia to ensure they’ll be able to insure their purchase when they drive.

Carmax, The Nation Largest used car sellerin a statement that it requires customers to arrange insurance when purchasing a vehicle.

“We are aware that some insurers may not currently offer coverage in select markets for certain Kia and Hyundai models,” the company said in a statement emailed to NPR. “If a customer has questions about eligibility or coverage, we encourage them to contact their insurance company.”

Last week, Garcia finally got Forte’s car insured through Liberty Mutual.

To get the best rate, she had to transfer her family’s two other auto insurance policies and her homeowner’s insurance policy to Liberty Mutual as well. She’s paying $150 more a month than she used to.

The single mom, who shares an auto insurance plan with two of her daughters, is still worried that the agreement might fall apart somehow and that she’ll be on the hook for the remainder of the loan she took out to buy the Forte.

Garcia, who works for a health plan, says she knows how the insurance industry works, but she’s never heard of companies refusing to cover certain car models.

“I’m a smart person, and I feel so stuck. And the financial loss could be huge. I’m sitting here trying to figure out how I can get $19,000 to pay for a car we can’t drive,” she said. “This, again, seems like a complete disaster — that these companies And these industries are not working together to protect the consumer.”