Insurers Warn of Increase in Catalytic Converter Theft

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During the pandemic, the theft of catalytic converters from vehicles has soared, prompting auto insurers to publish warnings as they process millions in claims and prompting drivers to take notice and call their insurer and mechanic. 

Key Takeaways

  • Catalytic converter theft is rising enormously throughout the U.S.
  • Claims paid totaled more than $21 million for State Farm in first 6 months of 2021
  • P &C trade association in December named auto and auto part theft is one of 5 trends challenging auto insurers
  • Theft is driven by using prices for precious metals embedded in the converters, supply chain issues, pandemic economic issues
  • There are actions drivers can take to help prevent theft

Catalytic converter theft is booming

According to claims data reviewed by the National Insurance Crime Bureau (NICB), thefts of catalytic converters increased a whopping 325% in 2020. NICB saw claims for 3,389 thefts in 2019 and 14,433 in 2020. These numbers only reflect instances where policyholders filed claims, as thefts of these parts are considered significantly under-reported. 

While numbers are not in yet for the full year of 2021, the rise in stolen catalytic converters has been accelerating sharply even since the first year of the pandemic, according to 2021 claims data from State Farm Mutual Auto Insurance Co.

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Claims skyrocketing for stolen parts 

In the 12-month period from July 1, 2020 to June 30, 2021, catalytic converter theft skyrocketed close to 293% nationwide, according to State Farm’s claim analysis. State Farm paid out more than $33.7 million in the most recent 12 month period dating back from its press release in July 2021, compared to the previous 12-month when it paid out less than $9 million.

During that 12-month period, there were more than 18,000 of these parts stolen and reported by State Farm customers, compared to slightly above 4,500 in the previous 12-month period, the company reported.

The largest U.S. auto insurer paid out slightly more than $12 million in claims for catalytic converter theft in the last half of 2020, it said this past summer. Yet, in the first 6 months of 2021, State Farm paid more than $21 million to cover them.

Coverage of stolen parts may not be triggered 

Not all auto insurance policies cover the theft of the converter, which has been mandatory part of all gas-powered cars since the 1975 model year, to reduce harmful emissions, according to Progressive.

A comprehensive personal auto insurance policy does covers this loss along with other part thefts, flooding, damage due to civil unrest and other non-traffic accident losses,  but owners usually pay the deductible, which could be equal to or greater than the cost of the catalytic converter depending on the car’s make and model. The NICB said it “advises drivers to contact their insurer to report the theft and determine the best course of action.”

As far as driving insurance costs, while this is in certain cases covered by insurance, it is only one factor of many that drive insurance rates. For example, theft, type of car, driving record, years driving experience, miles driven, etc., are part of the insurance picture and all play a role. Catalytic converter theft, while it does play a role in the overall picture, it is only a small part of the whole. ” said Tully Lehman, NICB spokesperson.  

 However, the drastic increase stolen auto parts as well as for vehicles themselves have contributed to rising comprehensive auto insurance policy costs, according to the American Property Casualty Insurance Association. APCIA’s policy research vice president Dave Snyder spoke on cost trends  as part of a presentation on the five key auto issues — including thefts — affecting auto premiums during the national fall/winter meeting of insurance commissioners in San Diego.  

Precious metals make catalytic converters attractive 

Insurers and industry advocates have said there is a strong correlation between the theft of  catalytic converters and the rise in market value of the precious metals that coat the component, namely platinum, rhodium, and palladium, especially in 2020 and later. Rhodium, for example, goes for about $13,700 an ounce, according to NICB, citing KITCO.com. Palladium is now a little less than $2,000 per ounce.

These parts fetch a lot of money at scrap metal or recycling facilities, especially now during a time when supply chain issues continue. Catalytic converters could be worth several hundred to several thousand dollars, although sometimes they can also go for just $50, according to industry experts.

The pandemic’s socioeconomic impact has also spurred theft and opportunity, according to NICB. 

“We have seen a significant increase during the pandemic. As the value of the precious metals contained within the catalytic converters continues to increase, so do the number of thefts of these devices. There is a clear connection between times of crisis, limited resources, and disruption of the supply chain that drives investors towards these precious metals,” said NICB President & CEO David Glawe.

What vehicles and states are most at risk? 

Thieves target bigger vehicles like large pickups and delivery vehicles because their undercarriage is higher from the ground and provides easier reach to the catalytic converter, NICB notes. Progressive says on its website that  newer cars whose parts would likely in better condition are more sought after by thieves, as are SUVs, which have a higher ground clearance. These thefts of the part, which can look like an oversized cheese grater from underneath the car, happen when the vehicles are stored in fleets in  open areas at night, allowing the thieves to steal many efficiently. 

“It only takes a few minutes for a thief to steal a catalytic converter, so multiple catalytic converters can be stolen in a relatively short amount of time,” Progressive stated

Toyota Priuses and other hybrids are especially attractive to parts thieves. Priuses boast two catalytic converters as a hybrid, according to NICB and as a hybrid, these two converters usually experience less corrosion per mile than other cars—upping the value of their precious metal parts. Other targeted or susceptible hybrid models include Honda Jazz, Toyota Auris, and Lexus RX no matter the make or model year, according to Allstate.

The top 5 states in catalytic converter theft, as ranked by State Farm’s experience with claims, is led by California, which counted for more than 3 out of 10 claims being filed, followed by Texas, Minnesota, Washington and Illinois. State Farm called the situation in Texas “dire,” noting during 2020 there were 445 catalytic converter thefts reported by State Farm customers but in the first half of 2021, that number “ballooned” almost 210% to 1,380.”  

The thefts tend to rise more sharply at the end of summer and through December, then drop back  in January, according to data from the  NICB and presented in a chart by the APCIA in its presentation. 

Some states are taking action

Ten states passed laws in 2021 to tamp down the market for catalytic converters by requiring  multiple forms of personal identifying information for anyone trying to sell used converters, including proof of vehicle ownership, according to the NICB. Others, like Washington State where the theft is rampant, could follow, as legislation has been introduced.

Tips from experts for avoiding theft and receiving compensation for stolen parts

  • Install a sensitive alarm system.
  • Engrave your vehicle’s VIN number on the catalytic converter. 
  • Park in well-lit areas or garages.
  • NICB advises car owners to install catalytic converter anti-theft devices available from various manufacturers.
  • Contact local law enforcement if your catalytic converter is stolen—this helps with measuring the trend.
  • If the catalytic converter has been stolen, you might hear a loud muffler disconnection sound, smell unclean exhaust exiting and feel a lack of acceleration. State Farm calls it a loud, “weird” noise. It can be dangerous to drive without one, insurers warn.
  • To be able to file an insurance claim in the future, talk to your agent about switching to comprehensive coverage if not already on your policy.

 

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