Hyundai and Kia are facing a lawsuit from insurance companies due to the theft of their vehicles, potentially leading to a $1 billion liability. This week, a judge rejected arguments to dismiss the suit.

Kia and Hyundai’s legal problems arose when thefts of their vehicles spiked in 2021. This occurred because the automakers did not install immobilizers on millions of cars, and videos on social media spread information on how to steal specific models that lacked immobilizers. 

The judge agreed with the plaintiff’s argument that it was “reasonably foreseeable” to Hyundai and Kia that people would steal vehicles without the theft-prevention device, as Federal Motor Vehicle Safety Standard 114 mandates a starting system to prevent engine or motor activation without the key.

Hyundai and Kia countered that insurance companies had accepted liability for the thefts by insuring the vehicles. However, US District Judge James Selna rejected this, noting that the case asserts claims of violations of state consumer protection laws, breaches of warranties, and fraud through omission and concealment.

In 2021, Kia and Hyundai thefts surged by 2,644 percent in Milwaukee, Wisconsin. 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 enhance their cars’ security against theft.

Earlier this year, the two companies reached a $200 million settlement in a class-action lawsuit filed by vehicle owners. It is anticipated that up to $145 million will be allocated to cover around nine million drivers and compensate them for their out-of-pocket losses.