Hyundai and Kia must face a lawsuit from insurance companies regarding the theft of their vehicles. The automakers could be on the hook for more than $1 billion as companies that insured their vehicles attempt to recoup their losses. This week, a judge rejected arguments to dismiss the suit.

Kia and Hyundai's legal headaches began when thefts of their vehicles dramatically rose in 2021. The automakers failed to install immobilizers on millions of cars, and social media helped spread videos that showed how to steal specific models that weren't equipped with immobilizers. 

The judge accepted the plaintiff's argument that it was "reasonably foreseeable" to Hyundai and Kia that people would steal vehicles that lacked the theft-prevention device. Federal Motor Vehicle Safety Standard 114 states that a car must have a starting system that prevents the normal activation of the car's engine or motor if the key is removed from the vehicle's starting system.

Hyundai and Kia argued that the insurance companies had accepted liability for the thefts by insuring the vehicles. However, US District Judge James Selna rejected that argument, noting that this case asserts claims that the automakers violated state consumer protection laws, breached implied and expressed warranties, and committed fraud through omission and concealment.

Kia and Hyundai thefts were up 2,644 percent in 2021 in Milwaukee, Wisconsin, alone. Affected Kia vehicles date back to 2011, while compromised Hyundais start with the 2015 model year. The automakers released a software update earlier this year to make stealing their cars harder.

Earlier this year, the two companies reached a $200 million settlement on a class-action lawsuit filed by vehicle owners. Up to $145 million is expected to cover some nine million drivers and compensate them for their out-of-pocket losses.

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