Amica Sues Car Giants in Federal Court Over “Defective” Vehicles and Thefts - and $6.7M in Claims

Friday, April 19, 2024

GoLocalProv News Team

 

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PHOTO: Unsplash/Chuttersnap

Rhode Island insurer Amica is suing Hyundai and Kia in federal court — over vehicles that Amica says the automakers “should have known were defective and failed to disclose this information to consumers” and that Amica had insured. 

In the 17-page suit filed Thursday in federal court, Amica said it “brought this action against Hyundai Motor America, Hyundai Motor Company, Kia America, Inc., and Kia Corporation arising out of the design, manufacture and distribution of motor vehicle vehicles, including certain 2011-2022 Kia vehicles and 2011-2022 Hyundai vehicles. These vehicles were defective because they did not contain an engine immobilizer (or any equivalent operational anti-theft equipment required by federal law and mandated by industry standards) and were therefore susceptible to thefts and/or vandalism.”

As a result, Amica says it has had “claim payments and associated adjustment expense collectively in an amount exceeding $6,700,000” - and that it “is now legally, equitably and contractually subrogated to the rights, interests and claims of its Insureds against all responsible third parties, including the Defendants.”

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“The Defendants breached express and implied promises and warranties to their consumers, including Plaintiff’s insureds,” claimed Amica. 

The action by Amica comes after a U.S. District Judge last year “rejected bids by Hyundai and Kia to dismiss litigation by several hundred insurers seeking to recoup more than $1 billion they claim to owe drivers whose vehicles were stolen or damaged in a social media-inspired theft spree.”

"In a decision on Nov. 15, U.S. District Judge James Selna in Santa Ana, California, rejected arguments that it was unfair to let insurers recover because they had collected premiums and assumed theft risks, and did not specifically identify which drivers were victims," reported Insurance Journal. 

 

Legal Action 

“Amica and its Insureds were not in possession of sufficient information that would have caused a reasonable person to suspect that the Vehicles were defective. Further, no ordinary person would be able to discern that the Vehicles were defective. An ordinary consumer, without sophisticated knowledge of mechanical systems and anti-theft devices, would not and could not suspect that the theft or damage to their Vehicle was, in fact, attributable to the defects associated with the vehicle,” says Amica in the lawsuit filed this week.  

“Due to each Defendant’s misrepresentations regarding the true state of the Vehicles, Defendants are estopped from asserting that any otherwise applicable statute(s) of limitations bar Amica’s claims,” stated Amica. 

Amica is suing on the counts of "negligence, strict liability, breach of warranties, breach of contract, deceptive trade practices, and “fraud by omission and concealment,” and is seeking “payment to Amica for all damages resulting from the replacement or repair of the defective Vehicles, in an amount to be proven at trial; payment to Amica for all damages allowed by law resulting from theft or attempted theft of Defendants’ defective Vehicles; and restitution as authorized by law” among other judgment requests. 

According to Insurance Journal, following the November 2023 court decision to allow insurers to sue, the car companies said the following:

“Hyundai said it was disappointed with the decision and looked forward to an eventual dismissal. It also said its dealers have installed anti-theft software on more than 1 million vehicles.

Kia said it remained confident that the plaintiffs’ legal claims had no merit, and said its vehicles complied with federal safety and theft-protection standards.”

Amica and Kia did not respond to GoLocal's request for comment on Amica's lawsuit at the time of publication; Kia later provided the following statement, 

 

Carmaker on Record

On Saturday, Kia provided the following statement to GoLocal:

As we have stated previously, lawsuits filed by insurance companies against Kia are without merit. Like all Kia vehicles, the specific models at issue in this case are subject to and comply fully with the requirements outlined in applicable Federal Motor Vehicle Safety Standards, including FMVSS 114 that governs theft protection measures. Additionally, The National Highway Traffic Safety Administration (NHTSA) has publicly stated that it has not determined that this issue constitutes either a safety defect or non-compliance requiring a recall under the National Traffic and Motor Vehicle Safety Act. 

In response to this situation, Kia continues to take comprehensive action to enhance the security of our vehicles in an effort to better protect our customers and prevent criminals from using methods of theft popularized on social media to break the law and steal or attempt to steal certain vehicle models.

“We’re continuing to strongly encourage eligible customers to receive the software upgrade that we developed and rolled out last year that is designed to restrict the operation of the vehicle’s ignition system should a potential criminal attempt to steal a locked vehicle without the key. To date, close to 1.1 million Kia vehicles nationwide have received the upgrade and we continue to spread awareness about its availability by establishing a dedicated website with detailed information, hosting off-site events in multiple cities to make it easier for eligible customers to receive the upgrade, and partnering with Carfax to inform owners that their vehicle is eligible for the upgrade. 

We also continue to provide steering wheel locks to owners of impacted vehicles that are not eligible for the software upgrade at no cost to them. These free steering wheel locks further enhance a vehicle’s security and can serve as a theft-deterrent for potential car thieves. Kia customers can obtain free, Kia-provided locks through their local law enforcement or they can request a steering wheel lock from Kia directly through the dedicated website. To date, we have distributed more than 370,000 locks and we will continue to provide them as they are needed. We also recently developed and introduced a new hardware modification that is designed for the vehicles that are not eligible for the software upgrade that works to combat theft by reinforcing the ignition cylinder body and preventing its removal through the method of theft promoted in videos that have spread across social media encouraging criminal activity.

Kia will continue to work with insurance companies, law enforcement agencies, and local officials across the country to combat car theft and the role social media has played in encouraging it, and we remain fully committed to supporting our customers.

 

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