Allstate Seeks Repayment from Hyundai, Kia Over Vehicle Fire Claims

Allstate and its subsidiaries, including Esurance, National General, Integon, and Safe Auto, have filed a subrogation lawsuit against Hyundai and Kia. Filed in the U.S. District Court for the Central District of California, the suit claims that Hyundai and Kia knowingly delayed recalls of vehicles with dangerous fire risks, which have led to significant property damage claims paid by Allstate. The suit states that from 2006 onward, Hyundai and Kia sold millions of cars with a potentially hazardous braking system that could ignite fires, even when the vehicle was parked and turned off.

The first consumer-reported incident to the National Highway Traffic Safety Administration (NHTSA) dates back to 2011, when a fire destroyed a parked Hyundai. Investigations identified moisture intrusion in the braking system as the cause, which can lead to electrical short-circuiting. Despite numerous consumer complaints, Allstate argues that Hyundai and Kia only issued recalls after extensive NHTSA scrutiny. Hyundai and Kia have since issued 17 recalls related to fire risks, but Allstate claims these measures have been insufficient to mitigate the ongoing hazards.

In addition to property damage claims, Allstate seeks compensation for costs related to repairs, replacements, towing, and vehicle rental expenses. The lawsuit also references a 2020 NHTSA consent order in which Hyundai and Kia agreed to pay $210 million in civil penalties due to delayed recalls. Allstate’s suit contends that Hyundai and Kia’s actions constitute deceptive trade practices, causing damages to Allstate and its insureds.