How Keyless Car Theft Is Disrupting the Auto Insurance Industry

TL;DR

The surge in keyless car theft is driving billions of dollars in losses for auto insurers, while reshaping risk models across the industry. Centrally positioned in the automotive value chain and a major factor in consumer behavior, insurance companies play a strategic role in shaping OEM security investments and incentivizing the adoption of proactive theft prevention measures. This article explores the impact of keyless car theft on the insurance sector and highlights how solutions like PlaxidityX vDome can help prevent theft before it occurs, reducing insurance claims, costs and risk exposure.

Over the past few years, the automotive industry has taken important steps to ensure that our connected, software-defined vehicles are secure from cyber threats that could potentially endanger passenger safety. These steps include new cybersecurity regulations and standards like UNR 155 and ISO 21434, which require OEMs to implement systems and processes for monitoring, detecting and responding to cyber attacks.

Despite these efforts, crime statistics show that today’s in-vehicle and backend (VSOC) cybersecurity systems are less effective in addressing a new and rapidly growing threat – keyless car theft. Fueled by sophisticated cyber-enabled techniques, car theft has reached epidemic proportions in several countries, including the UK, Canada and the US. In the UK alone, the number of vehicles stolen has increased by 74% over the past decade.

The ramifications of surging car theft are being felt across the automotive ecosystem. One of the most challenged sectors is automotive insurance. With increasing operational costs due to the growth in claims and higher risk, auto insurers’ immediate response to rising theft rates was to raise their premiums and theft deductibles. However, these defensive steps could also have a negative impact by reducing insurers’ market competitiveness and driving up the prices of next-generation vehicles.

How keyless car theft impacts insurance companies

The cost impact of rising car theft – especially digital theft – is a multi-billion-dollar challenge that is changing the way auto insurance is priced, managed and regulated worldwide.

1. Rising claim payouts
   
   Insurance Bureau of Canada data shows that theft-related claim costs rose from $436 million in 2018 to $1.55 billion in 2023 – an increase of 254% in just five years. Even with theft incidents falling slightly in 2025, insurers are still paying over $1 billion annually to replace stolen vehicles. Similar spikes were recorded by UK insurers, where total theft- and repair-related claim costs rose by 15% year-on-year in early 2025. This sustained volume of high-value payouts is cutting into underwriting profitability.
   
2. Premium increases and theft-risk surcharges
   
   To offset losses, many auto insurers in cross theft-prone metro areas such as Toronto, Chicago, and London have raised their comprehensive coverage rates by 10–25%. For vehicles listed among the most frequently stolen, premiums jumped by an average of 17–20%, with high-end SUVs like the Lexus RX and Range Rover seeing surcharges exceeding 50%. These higher costs have filtered down to policyholders but only partly recover insurers’ payouts. Some carriers are also introducing theft-risk surcharges ranging from $500 to $1,500, some of which can be waived if car owners install stolen vehicle recovery devices.
   
   For frequently stolen models, some insurers are declining coverage or requiring car owners to install aftermarket anti-theft systems or GPS trackers. Cyber-related theft risk now factors into policy models together with other variables such as location and vehicle age.
   
3. Broader cost implications
   
   Beyond payouts, theft spikes force insurers to spend more on fraud prevention, vehicle tracking partnerships and claims investigation – adding millions of dollars in administrative overhead. The increased cost of replacement vehicles – driven by inflation, global parts shortages, and shipping delays – further amplifies loss costs. At the end of the day, consumers bear the final cost when insurance companies inevitably raise premiums, or worse, refuse to insure certain cars in high-risk areas.
   
   In Canada, where theft-related claim costs surged to $1.55 billion in 2023, the Insurance Bureau of Canada (IBC) recently launched How Cars Measure Up – an online tool that lets consumers compare vehicles based on real insurance claims data, including theft frequency, before buying or leasing. The tool ranks Canada’s most popular makes and models using claims experience from 2019 to 2024, allowing buyers to compare up to three vehicles side by side. It’s a clear sign that the insurance industry is pushing theft risk awareness upstream – to the point of purchase – rather than dealing with the consequences after the fact.
   

Thieves will always find the weakest link

Today’s vehicle thieves are not opportunistic amateurs – they are organised, technically skilled, and constantly adapting. When one attack vector is blocked, they find the next vulnerability. For example, when physical security improved, criminals shifted to electronic exploits like relay attacks, CAN injection and key cloning. And when a vehicle is too well-protected to steal in one piece, organized crime groups simply disassemble it.

In a recent Frontex-led operation across 25 countries, law enforcement seized 505 stolen cars and 2,000 vehicle parts being smuggled across EU borders. According to Frontex, criminal gangs routinely strip stolen vehicles into parts within hours to make them harder to track – a car stolen at 8 PM can be fully dismantled by midnight. In some cases, vehicles are cut in half and shipped in containers labelled as “auto parts” to evade detection at ports like Constanta, Rotterdam and Baltimore.

This level of sophistication underscores a critical point: stolen vehicle recovery alone is not enough. By the time a vehicle is located, it may already be in pieces, in a shipping container, or on another continent.

The new role of insurance companies in preventing keyless theft

Auto insurance companies have a clear vested interest in minimizing digital car theft. Moreover, given their importance in the automotive value chain, they are well-positioned to push OEMs to invest in advanced security technologies that combat digital theft.

The most striking example of this dynamic played out with Hyundai and Kia. Many of their models manufactured between 2011 and 2022 shipped without engine immobilizers – a basic anti-theft feature that was already standard on 96% of vehicles from other manufacturers. When a viral social media post in late 2021 exposed how easily these vehicles could be stolen using just a screwdriver and a USB cable, thefts surged dramatically. Some cities reported increases of over 800%.

The insurance industry’s response was swift and unprecedented. State Farm, Progressive and Allstate all stopped writing new policies for affected Hyundai and Kia models in multiple US states. It was, by industry standards, an extraordinary move – insurers rarely refuse to cover entire vehicle lines. But the losses were simply too large to absorb.

This decisive action taken by insurers effectively forced the OEMs to respond. Kia and Hyundai rolled out free software security upgrades, distributed steering wheel locks and ultimately settled a class action lawsuit that could reach up to $145 million in payouts to the plaintiffs. By 2025, with immobilizers now standard on all new models and collaborative efforts across law enforcement, automakers and insurers, US car theft rates had declined by 23%.

More recently, Jaguar Land Rover (JLR) faced a similar dynamic when a wave of keyless thefts caused premiums to soar. In some cases, Range Rover owners had difficulty obtaining insurance cover all together Consequently, JLR stepped into the insurance market itself, offering specialized cover for Range Rover customers and announcing a £10 million investment in security to help prevent keyless thefts.

Both of these examples highlight why auto insurers need a deep understanding of new vehicle technologies and their associated risks. This knowledge allows them to assess the likelihood and potential impact of incidents beyond traditional statistical models and to recommend solutions. At the same time, auto insurance companies should prioritize working with OEMs that implement robust automotive cybersecurity and theft prevention solutions.

Insurers are already building new product categories

Some forward-thinking insurers are moving beyond traditional auto coverage to address cyber-enabled vehicle threats directly. Hartford Steam Boiler (HSB), a Munich Re company and a top-10 admitted cyber insurer in the US, now offers a dedicated Commercial Cyber Insurance for Auto product. This policy covers business interruption caused by auto cyberattacks, cyber extortion targeting vehicle systems, damage to a vehicle’s electronic systems from unauthorized access, and even “betterment” – the cost of upgrading hardware or software to prevent future incidents.

The emergence of auto-specific cyber insurance products like these signals that the industry recognizes digital vehicle threats as a distinct and growing risk category, separate from traditional comprehensive auto coverage. It also reinforces the case for proactive, in-vehicle cybersecurity solutions that can reduce the likelihood of claims in the first place.

Focus on theft prevention – not stolen vehicle recovery

In countries where car theft is rampant, a great deal of effort has been invested in trying to recover vehicles after they’re stolen. Many auto insurance companies require car owners and fleet operators to use stolen vehicle recovery services. However, in order to truly solve the problem, what’s needed is a way to make vehicles more difficult to steal in the first place.

PlaxidityX vDome is the only product of its kind designed to prevent keyless car theft, rather than recovering the stolen vehicle after the fact. This software solution actively detects vehicle theft attempts in real-time, including unauthorized vehicle network manipulation (e.g.,  CAN injection) and unauthorized key fob registration (e.g., key cloning).

Interestingly, these keyless car theft techniques map directly to the same cybersecurity vulnerability classes – injection, authentication bypass, spoofing – that enterprise security teams already track in frameworks like MITRE ATT&CK and OWASP. This isn’t a newly discovered threat category; it’s a known cyber attack pattern applied to a new target. 

Threat detection is based on attack signatures for a wide variety of known attack vectors, resulting in virtually zero false positives. Upon detection, vDome immediately triggers a targeted prevention action, such as disabling the engine, to stop the vehicle from being stolen. High precision is crucial for theft prevention – otherwise the car’s engine could be locked or disabled due to a false positive, causing major inconvenience to the vehicle owner.

FAQ

• Why is keyless car theft increasing?

  Keyless car theft is rising due to advanced hacking techniques, widespread keyless entry systems, and gaps in automotive cybersecurity that attackers exploit.

• How does keyless car theft impact insurance companies?

  It drives higher claim payouts, increases premiums, and forces insurers to adjust risk models, sometimes refusing coverage for high-risk vehicles.

• What is the difference between theft prevention and vehicle recovery?

  
  Theft prevention stops the attack before the vehicle is stolen, while recovery solutions attempt to locate the vehicle after theft, often too late to prevent loss.
  

• How can keyless car theft be prevented?

  
  Using automotive cybersecurity solutions with real-time anomaly detection, vehicle network monitoring, and attack prevention mechanisms can stop theft attempts early.
  

• What technologies are used to detect keyless theft attacks?

  
  Technologies include anomaly detection, CAN bus monitoring, behavioral analysis, and attack signature detection to identify and block unauthorized access.