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Catalytic Converter Theft: A Legal Perspective on the Growing Risk

By Karl E. Hunsicker

One of the top issues facing organizations that manage fleet vehicles, or provide employees with automobiles, is the significant rise in reported thefts of Catalytic Converters from individual vehicles. Across the country, insurance claims of catalytic converter (“CAT”) thefts have increased from 4,500 to 18,000 between July 1, 2020, and June 30, 2021 — an increase of 293%.  According to a study conducted by the National Insurance Crime Bureau Operations, there were 108 catalytic converter thefts per month on average in 2018, which more than doubled to 282 average monthly thefts in 2019. By 2020 though, that figure increased nearly five-fold, to 1,203 average thefts per month in 2020. By December, 2020, 2,347 insurance claims were for CAT theft, doubling the monthly average.

This trend has only continued into 2021, and there is no end in sight as we close out this year. According to a report by State Farm Insurance, during the first six (6) months of 2021, the top 5 states with the highest number of insurance claims for catalytic converter thefts were California, Texas, Minnesota, North Carolina, and Illinois.  The amounts of claims made in these five states, alone, totaled $14.21 million. Other states are by no means immune from this explosive rise in CAT thefts.  New York City has seen its amount of reported CAT thefts quadruple from October of 2020 through October of 2021. From Florida to Washington, every state in the Union is experiencing this meteoric rise in stolen catalytic converters.

The problem is not limited to the United States. In London, the Metropolitan Police Motor Vehicle Crime Unit investigated nearly 15,000 reports of catalytic converter thefts in 2020, compared to 9,500 the previous year.  QBE, a European business insurance specialist, reported that among its customers in the EU, catalytic converter thefts increased 55% between 2018 and 2020. Claims are expected to trend further upward through the remainder of 2021. Why is this happening? The answer to this question first requires a basic knowledge of catalytic converters, what they do, and of what materials they are manufactured.

What is a Catalytic Converter?

Since 1975, the EPA has required that all vehicles assembled, sold, or operated in the United States have a working catalytic converter installed. A vehicle’s catalytic converter (“CAT”) is an exhaust emission control device that converts toxic gases and pollutants in exhaust gas from an internal combustion engine into less-toxic pollutants by catalyzing a redox reaction. This reaction is made possible by the precious metals Palladium and Rhodium that are contained in the CAT. The CAT’s Rhodium combines with Palladium to form a reduction catalyst, which lowers nitrogen oxide emissions (NO2) by stripping off nitrogen atoms and forming oxygen (O2) and nitrogen gas (N2).

Thieves are not concerned about this chemical process, however. “Prices for palladium, rhodium, all the metals, even copper, steel, and aluminum [have] gone crazy. We’re going to see all kinds of thefts, unfortunately,” said Peter Cook, operations manager of a scrap metal recycling company in Atlanta, GA. (Stevens, Alexis. “Fast cash: Catalytic converters thefts again on the rise in metro Atlanta.” ajc.com, The Atlanta Journal Constitution, March 15, 2021, https://www.ajc.com/news/fast-cash-catalytic-converters-thefts-again-on-the-rise-in-metro-atlanta/VI6BTWVQX5DTHJPV6UYE2CA2SM/, accessed November 22, 2021). What gets the criminals’ attention is the amount of Rhodium and Palladium contained inside the CAT. Both metals are closely related to platinum and are very valuable. The price of palladium has quintupled within the last five years, hitting a record of $2875 an ounce in 2020. It is currently worth $2000–$2500 an ounce. Palladium is even more valuable than gold, which, as of November 19, 2021, is $1,851.60. Rhodium is even more valuable; it skyrocketed more than 3000 percent last year to a record $21,900 an ounce—almost 12 times the price of gold.

The Nuts and Bolts of CAT Theft

Thieves, often under the cover of darkness, typically crawl under the front half of the target vehicle and remove the CAT from the vehicle’s exhaust system. This is done using readily available tools, such as an angle grinder, a blowtorch, or a high-speed, cordless, reciprocating saw, known commonly as a “Sawz-All.” Thieves using angle grinders or blowtorches can remove a CAT from an automobile in well under 5 minutes. Criminals using a Sawz-All can, with practice, remove a catalytic converter from a vehicle in as little as 90 seconds. Most victims are unaware of the theft until  they begin operating the vehicle, and hear an incredibly loud, rumbling noise from the vehicle’s exhaust system. This sound increases in volume as the gas pedal is pushed.

Thieves usually take the entire catalytic converter to scrapyards, or the black market, where the materials are then sold to reputable metal recycling companies. On average, CAT thieves can typically receive $150 for each stolen unit. The cost of replacing a stolen or damaged CAT range from $2,000 to $3,000, depending on the vehicle.  Fortunately, most comprehensive auto insurance policies will cover CAT theft, minus the deductible amount.  Individuals or companies that own vehicles with a higher risk of CAT theft (see below), may want to consider lowering their insurance deductible to minimize the financial loss of replacing a catalytic converter.

An overwhelming number of reported CAT thefts are from Hybrid vehicles, with the Toyota Prius being the most common make and model targeted. For example, during the first two months of 2021, Cambridge, MA experienced forty reported stolen CATs that originally belonged to a Prius.

Hybrid vehicles are targeted because they have significantly less carbon emissions than standard automobiles. Accordingly, their CATs will have more palladium and rhodium remaining in the unit.  SUVs, vans, and other types of light trucks are also popular among CAT thieves because their higher clearance allows one to crawl under the vehicle more easily.

12 Ways to Reduce Risk

How can your organization protect itself against this costly risk?  We recommend the following precautions for you and/or your employees to take wherever you garage your vehicles.

1) Consider installing a security alarm to your vehicle, preferably one that activates if the vehicle is tilted, or lifted, in any way.

2) Consider a commercially made, “CAT Protection Device” available online and at automotive stores. Most CAT protection devices range in price from $125 to $300.

3) Where possible, park your vehicle in a garage, or in a well-lit, busy location.

4) If your business or home has a CCTV security camera system, park vehicles in the camera’s field of view. This may help to alert you of a potential intruder, or if there is a theft, you will have  captured useful footage which can be used by the Police to apprehend the thief.

5) When away from home or work, try to use parking lots that are well-lit and have security measures such as manned security, security lighting or CCTV.

6) Facing the vehicle’s hood against a wall (with the CAT being near the front of the vehicle) can help to restrict the space available and make it harder for a thief to crawl under the vehicle. For high-clearance vehicles such as vans and 4x4s, where possible, park against, or near, walls or other vehicles.  Where you have a fleet of vehicles, consider parking any low clearance vehicles in a manner that obstructs access to higher clearance vehicles.

7) Stay current and informed of criminal developments in your immediate area.  The “Police Blotter” or “Crime Watch” portion of your local newspaper should contain a summary of recent police reports filed nearby.  For those living in a large city, smaller neighborhood newspapers may contain information that is more relevant to your immediate area. Neighborhood watch group websites, and independent community news websites, are also a great source of information of crime, including catalytic converter thefts, in your community.  Additionally, following your local Police Department’s social media accounts is also a great way to stay informed of the latest developments.

8) Be aware of your surroundings. Catalytic converter thieves will typically operate during the late-night, or early-morning hours.

9) The sound of metal being cut by a saw, or weakened by a metal grinder, if occurring in the middle of the night, and on an otherwise deserted street, is a good indication that CAT thieves are operating nearby.

10) Be wary even during the day. Many proficient thieves are brazen enough to perform their work in broad daylight, with a lookout and get-away vehicle nearby.

11) Above all else, if noticed, do not approach, or attempt to apprehend, potential CAT thieves. It is quite common, in many areas of the United States, for professional CAT thieves to go about their worked while armed.

12) If you feel that you are in the process of becoming a victim of Catalytic Converter theft, immediately get to a safe, secure area, and call 9-1-1.

If you become a victim of CAT theft, and have questions about whether that loss is covered by your insurance, you should contact your insurance broker and/or legal counsel to discuss options for pursuing a claim.  Additionally, if police are able to apprehend the thief, you may also be eligible to receive financial restitution as part of the criminal sentence.  Legal counsel familiar with these issues can often provide guidance on working with the local police and prosecutors to ensure your rights of recovery are protected and pursued to the greatest extent possible.

For more information regarding this trend or how it affects your organization, please contact Karl E. Hunsicker at [email protected] or 312-506-4488.