Allstate Insurers Sue Hyundai, Kia to Pay for Claims From Defective Cars

A group of subsidiaries of Allstate have filed a subrogation suit against Hyundai and Kia to get back costs paid to insureds for damages when their cars suddenly erupted in flames.

According to the lawsuit, now in U.S. District Court for the Central District of California, Hyundai and Kia “purposefully and knowingly failed to recall millions of their defective vehicles containing potentially deadly defects, thereby putting countless lives at risk from 2006 to date.”

The first complaint from a consumer to the National Highway Traffic Safety Administration was filed in 2011 following a fire of a Hyundai parked in the driveway of a home. A forensic engineer concluded the cause of the fire was moisture in the braking system installed in the engine compartment that causes a short circuit even if the vehicle is off, according to the suit. The suit includes pages of consumer complaints filed with the NHTSA related to vehicle fires that often occurred when parked.

Related: Hyundai, Kia Are Sued After Recalling Vehicles Because of Fire Risk

The insurers — Allstate and subsidiaries including Esurance, National General, Integon, and Safe Auto — allege Hyundai and Kia were slow to acknowledge any defects, and only after great scrutiny by the NHTSA did the car manufacturers issue safety recalls. The suit claims Hyundai and Kia have issued 17 recalls to date but some of the fixes were not adequate.

In the meantime, insureds of Allstate’s insurance companies “have suffered ascertainable damage to their property, including damages for repairs, replacement, loss of use and loss in value of their vehicles, together with consequential damages, including rental, towing and related expenses, plus damage to other real and personal property.”

“The unfair and deceptive trade practices committed by defendants caused plaintiffs’ damages,” the insurers alleged in the suit.

In November 2020, Hyundai and Kia agree to a consent order with NHTSA to pay a record $210 million civil penalty for failing to recall more than 1.5 million vehicles in a timely manner.