State Farm says it has stopped insuring some Kia, Hyundai vehicles
State Farm said it has temporarily stopped providing new auto insurance policies for some model years and trim levels of Hyundai and Kia vehicles in some states because of an increase in thefts for those cars.
"This is a serious problem impacting our customers and the entire auto insurance industry," a State Farm spokesperson said in an email to CBS MoneyWatch.
State Farm didn't specify which types of Hyundai and Kia vehicles are affected, nor in which states it has suspended new insurance policies for the cars. But the decision comes after the Highway Loss Data Institute found that theft claims for 2015-2019 Hyundai and Kia vehicles were almost twice as high as compared with all other automakers.
The reason for the higher theft claims is a lack of electronic immobilizers in some Hyundai and Kia vehicles that would otherwise prevent thieves from breaking in and bypassing the ignition, the Highway Loss Data Institute said. Electronic immobilizers are standard on almost all vehicles from those years made by other automakers, it added.
"We take seriously our responsibility to manage risk and the impact of excess claim costs on all our customers," State Farm said in its statement. "In this case, it became necessary to take action to protect our policyholders and our business."
Progressive puts brakes on new policies
Progressive has also stopped writing new policies on some Hyundai and Kia cars, CBS station KDKA reported. Progressive didn't immediately return a request for comment from CBS MoneyWatch.
In an email to CBS MoneyWatch, Hyundai said it "regrets this decision by insurers and its impact on select Hyundai vehicle owners and lessees, which we anticipate will be temporary."
"Engine immobilizers are now standard on all Hyundai vehicles produced as of November 2021 — and have long been standard equipment on all Hyundai vehicles with push-button ignitions," the statement said.
The carmaker added that it is planning a software update next month that will help affected vehicles, and that it is also providing free steering wheel locks to some law enforcement agencies to distribute to local residents who own models that are impacted. Owners can also bring their cars to local Hyundai dealers to purchase and install a customized security kit, it added.
Kia America also told CBS MoneyWatch that it "regrets" the decision by the insurers. It added that it will have software upgrades available for most affected vehicles by mid-2023. In the meantime, it said it is also providing free steering wheel locks to law enforcement agencies to distribute to impacted car owners.