Compulsory motor insurance for drivers but optional for insurers? Why are American motor insurers refusing to insure?
It’s common knowledge that motor insurance is compulsory by law (in India, the USA and most other countries). In an economy like the USA where there is a lot of emphasis on insurance protection, an ever-increasing demand for motor insurance is natural, but why are certain motor insurance companies refusing to insure?
More importantly, are they legally allowed to refuse insurance when the law dictates that such insurance is mandatory?
Two of America’s largest motor insurers, Progressive and State Farm, have been refusing to write motor policies for some older Hyundai and Kia models for the simple fact that they are too easy to steal!
According to the Highway Loss Data Institute’s claims data, some 2015 to 2019 Hyundai and Kia models are twice as likely to be stolen compared to other vehicles of similar age simply because they lack the basic auto theft prevention technology included in other vehicles from those years.
These vehicles have no electronic immobilizers, basically a computer chip in the car and another in the key that communicate to confirm that the key really belongs to that vehicle. Without the right key, an immobilizer does not let the car move. The absence of this tech makes these Kia and Hyundai models easy targets for thieves.
Immobilizers were standard equipment on the vehicles sold for the 2015-2019 model years, but Hyundai and Kia cars of that period did not have them. Vehicles that have push-button start systems, rather than the metal keys that must be inserted and turned, have immobilizers, but not all models with turn-key ignitions do.
Eventually, stealing these vehicles became a social media trend and the car thieves began posting videos of their thefts and joyrides and also explaining how to steal these cars.
This resulted in State Farm and Progressive refusing to insure Hyundai and Kia vehicles because of the associated theft losses. During the past year the theft rates for certain Hyundai and Kia vehicles more than tripled. As motor policies are priced based on the level of risk they represent, this explosive increase in thefts makes these vehicles extremely challenging to insure.
According to the Insurance Information Institute, it is very unusual for auto insurers to simply stop writing new policies on a given make or model of vehicle. Usually, insurers want to expand their market share depending on where they’re doing business.
Engine immobilizers are now standard in all Kia and Hyundai vehicles. Both automakers said they are developing security software for vehicles that were not originally equipped with an immobilizer and began notifying owners of the availability of this software, which will be provided at no charge. They are also providing free steering wheel locks for police departments to supply to local residents who have these models that could be easily stolen.
This blog post is brought to you by the minds at insurancepe!
Got questions or doubts about anything insurance?
Need advice or help understanding your insurance needs?
Want the best bang for your buck when buying insurance?
We got you!
Reach out to us at:
Whatsapp: 89779 18030
Phone: 040 6631 5464
E-mail: contact@insurancepe.com
Visit us at: www.insurancepe.com
