Watch Out for the Cat(alytic) Burgler

Todd Shepard, Founder Shepard & Shepard Insurance Solutions

They say it takes an experienced thief only two minutes to cut or unbolt your catalytic converter and nowadays its even happening in broad daylight!

The theft of catalytic converters has been on the rise with some areas receiving multiple theft reports daily.

Scrap recyclers will pay big money for a stolen converter because they will get even bigger money when they extract and sell the precious metals. Feeding this market is the continued increase in value of those metals, especially the silvery-white chemical element called rhodium which has skyrocketed in value over the past few years. To understand why the price of rhodium has jumped like crazy we need to look to the platinum mines of South Africa where over 80% of the world’s rhodium is produced. Rhodium is a by-product of the production of platinum and palladium. When the miners in South Africa are cranking out platinum there is plenty of rhodium to go around. The problem occurred around 2008 when the recession hit causing a reduction in the demand for platinum yet the mining continued full throttle. After a while they realized so much platinum had been stockpiled, they had to slow production, drastically reducing availability to the leftover rhodium we need to shove up our exhaust.

That brings us to today’s problem. Until there is a higher demand (and more profitability) in the production of platinum it’s not likely we will see any substantial increase in mining activity resulting in a decrease in availability, and increase in the value of, our friend, rhodium.

Is the theft of my catalytic converter covered under my insurance?

What is a catalytic converter?

Since 1976 the United States has mandated cars and trucks be equipped with a round canister connecting two pieces of piping in the exhaust called a catalytic converter. The converter contains platinum, rhodium and palladium which have a unique ability to remove the most toxic pollutants from vehicle exhaust. Since the goal of the catalytic converter is to change harmful gasses from the vehicle exhaust into something less damaging to the environment these metals are precious in more ways than one!

Why would thieves target catalytic converters?

Yes and no. While the theft of auto parts is a covered peril under comprehensive part of a policy the cost of replacement is often similar to the deductible on a commercial insurance policy meaning yes you can claim it, but you may not get much, if any, to cover the loss. Keep in mind also that each stolen converter will usually result in its own deductible so it can be very costly if you have multiple cars hit at one time. A good way to protect yourself is to review your insurance policy and request your agent add an ‘aggregate’ to your comprehensive coverage if not already in place. An aggregate will usually cap your outof-pocket exposure to five times your deductible when there is a loss involving multiple vehicles.

What is being done?

According to the Insurance Journal, some states are considering legislation to address the growing problem. In North Dakota, a bill was introduced making it illegal for core recyclers such as junk dealers, pawn shops, recyclers to purchase catalytic converters that are not attached to a vehicle unless the recycler is a parts dealer or repair company. Regulations to crack down on the purchase of off the street parts is likely the only way to curb the demand. Auto dealers and auto service shop owners may want to discuss this topic and potential solutions with their associations and representatives.

In the meantime, the best protection is to keep your lot well lit, monitored by a security system, park inside if possible, inspect your inventory daily for loss or damage, and report any suspicious activity.

Todd Shepard is the founder of Shepard & Shepard Insurance Solutions and regular contributor to the Front Row. For more information or a dealer insurance quote visit shepquote.com or call 855-396-0488