A group of Allstate’s subsidiaries has filed a subrogation suit against Hyundai and Kia. The suit aims to recoup costs paid to insureds whose cars suddenly caught fire.
According to the lawsuit in the U.S. District Court for the Central District of California, Hyundai and Kia “intentionally and knowingly failed to recall millions of their defective vehicles with potentially deadly flaws from 2006 until now, endangering countless lives.” The first consumer complaint to the National Highway Traffic Safety Administration was in 2011 after a Hyundai parked in a driveway caught fire. A forensic engineer determined that moisture in the braking system in the engine compartment caused a short circuit even when the vehicle was off. The lawsuit includes numerous consumer complaints to the NHTSA about vehicle fires, often while parked. The insurers claim Hyundai and Kia were slow to recognize defects, and only after intense NHTSA scrutiny did they issue recalls. The suit alleges that of the 17 recalls so far, some fixes were insufficient.
Insureds of Allstate’s insurance companies have suffered property damage, including repair, replacement, loss of use, and loss in value of their vehicles, along with consequential damages like rental, towing, and other expenses, and damage to other property. The insurers allege that the defendants’ unfair and deceptive trade practices caused these damages. In November 2020, Hyundai and Kia agreed to a consent order with the NHTSA and paid a record $210 million civil penalty for failing to recall over 1.5 million vehicles in a timely manner.
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