Theta II Class Action Settlement: Warranty, Reimbursements, and Appeals

The Theta II class action settlement is actually a family of four related settlements covering Hyundai and Kia vehicles with engines prone to connecting rod bearing failure. If you own one of the covered cars in 2026, the benefit that still matters is an extended engine warranty — lifetime coverage on the original Hyundai Theta vehicles, and 15 years or 150,000 miles on everything else — that pays for a qualifying engine repair at an authorized dealer with no out-of-pocket cost. Most cash-reimbursement filing deadlines have closed, but a rolling 90-day window still lets you claim towing, rental, and related costs when a covered failure happens today.

Which Settlement Covers Your Vehicle

What people call “the Theta II settlement” is four settlements, each with its own vehicle list, website, and terms. Sorting out which one applies to your car is the first step, because the warranty length and claim portal differ.

The original Hyundai Theta Engine Settlement covers Hyundai vehicles with 2.0-liter and 2.4-liter Theta II GDI engines: 2011–2019 Sonata, 2013–2019 Santa Fe Sport, and 2014–2015 and 2018–2019 Tucson. Final approval came on June 10, 2021. This is the settlement that carries a lifetime engine warranty.¹
The Kia Engine Settlement is the parallel program for 2011–2019 Optima, 2012–2019 Sorento, and 2011–2019 Sportage with Theta II GDI engines. For 2019 Kia models, only vehicles built before the Knock Sensor Detection System was added at the factory are included.²
The Hyundai Engine Litigation II (E2) Settlement expanded coverage to Hyundai vehicles with the Nu 2.0-liter GDI, Gamma 1.6-liter GDI, and Theta II 2.4-liter MPI engines — including certain Sonata Hybrid, Santa Fe, Tucson, Elantra, Elantra GT, Elantra Coupe, and Veloster model years from 2010 through 2021. Final approval came in 2024.³
The Kia E2 Settlement is the corresponding second wave for additional Kia models. The court entered final judgment on April 29, 2024, with an effective date of May 29, 2024.⁴

The fastest way to confirm coverage is to run your 17-character VIN through the relevant settlement website. Model year alone is not enough — several of these model years shipped with more than one engine option, and only certain engines are covered. The VIN sits at the lower-left corner of the windshield on the driver’s side, on the door jamb sticker, and on your registration.

Both current and former owners qualify, whether the vehicle was purchased new, used, or leased. Commercial owners such as dealers and auction houses are excluded from the extended warranty, but the warranty transfers to the next individual owner.³

The Extended Engine Warranty

The warranty is the settlement benefit that still matters most in 2026. Under the original Hyundai Theta settlement, coverage is lifetime for the engine short block assembly — the block, crankshaft and bearings, connecting rods and bearings, and pistons.¹ Under the E2 and Kia settlements, coverage runs to 15 years or 150,000 odometer miles from the original retail delivery date, whichever comes first.³ The warranty follows the vehicle, so buying one used does not void it.

If your engine seizes, stalls due to bearing damage, or shows related symptoms, take the vehicle to an authorized Hyundai or Kia dealership. The dealer handles the repair under the extended warranty. No separate claim form is required just for the warranty repair itself.

The KSDS Requirement

One condition governs everything else: your vehicle must have the Knock Sensor Detection System (KSDS) software update installed. KSDS monitors the engine for the abnormal knocking that precedes a bearing failure and can reduce engine power and trigger a warning to head off a full seizure or fire. Hyundai’s warranty page states that if the update has been installed, the extended coverage applies; if it hasn’t, you can still schedule the free installation at an authorized dealer to become eligible.⁵ Without KSDS, a bearing-related warranty claim can be denied.

Vehicles already covered by specific NHTSA recalls are exempt from the KSDS prerequisite. For Hyundai, those are Recall 198 (NHTSA 20V746) and Recall 209 (NHTSA 21V727).³ For Kia, the exempt recalls are NHTSA 20V750 and 21V844.⁶ Even for exempt vehicles, both manufacturers recommend installing the update anyway for the added protection.

Cash Reimbursements Still Available

Most of the general claim deadlines have passed. The original Hyundai Theta cutoff was August 9, 2021,¹ and the Hyundai E2 cutoff for most claims was July 8, 2024.³ What remains open is a rolling 90-day window: for a qualifying repair, failure, or fire that happens after the general deadline, you must submit your claim within 90 days of the date you incurred the costs.⁴

Within that window, the settlements cover several categories of loss:

Full reimbursement for out-of-pocket engine repairs caused by connecting rod bearing failure, including parts and labor, whether performed at a dealership or an independent shop.
Towing, rental car, and rideshare costs tied to a qualifying failure or repair.¹
A flat inconvenience payment for owners who experienced significant repair delays after a qualifying failure.
Loss-of-value compensation for owners who sold or traded in the vehicle at a reduced price after an engine failure, calculated from the gap between the Black Book wholesale value and what the owner actually received.
Total-loss compensation if a non-collision engine fire destroyed the vehicle: the Black Book value at time of loss minus any insurance payout, plus a $150 goodwill payment.⁴

The practical read: the dealer covers the repair itself under warranty at no charge. Everything else you paid because of the failure — towing to the shop, a rental while it sat — needs a claim form within 90 days.

How to File a Claim

Kia claims are filed through Kia’s customer care portal.⁷ Hyundai claims go through the relevant settlement website — hma-thetasettlement.com for original Theta vehicles, hma-e2settlement.com for E2 vehicles. Paper claims can be mailed to the addresses listed on each site.

Documentation varies by claim type, but you will generally need:

Your 17-character VIN.⁷
Proof of expenses — receipts, bank or credit card statements, or an under-penalty-of-perjury attestation on the claim form if you paid cash and have no receipt.⁸
Repair orders showing the date and nature of the work, especially for repairs performed outside a Hyundai or Kia dealership.
Open and close dates on the repair order if you are claiming a delay-related payment.
Title or registration documents to prove ownership during the relevant period, when applicable.

Save the claim ID and confirmation once you submit. Review generally runs 30 to 90 days, during which the administrator may request additional documentation; incomplete submissions are the most common cause of delay.

Appealing a Denied Claim

If the administrator denies your claim, the settlement provides an arbitration path through BBB National Programs. First, send written notice to Hyundai or Kia that you dispute the denial. The manufacturer then has 30 days to try to resolve it directly. If that period ends without resolution, you have 30 days to initiate arbitration through BBB National Programs.⁹

You file by completing an arbitration request form on the BBB National Programs website and selecting the correct settlement from the dropdown. BBB National Programs aims to issue a decision within 60 days, and that decision is final and binding on you and the manufacturer.¹⁰ BBB National Programs can also be reached at 1-800-246-2808.

The “Exceptional Neglect” Exclusion

The settlements let the manufacturers deny warranty claims for “exceptional neglect,” and this is narrower than it sounds. It does not mean a missed oil change. The definition is a vehicle that clearly shows a lack of maintenance for at least a year to the point that it appears dilapidated, abandoned, or beyond repair. The other route to a neglect finding is failing to install the KSDS update within the required window.²

Keeping oil-change and maintenance records removes this as a live issue. Follow the intervals in the owner’s manual, typically 7,500 miles or 12 months for normal driving. Dealership service is already on file, independent shop receipts work, and DIY oil-change parts receipts with the mileage noted are enough to document the work.

Tax Treatment of Payments

Not every payment is taxed the same way. Under federal tax law, all income is taxable unless a specific exception applies, and the IRS looks at what each payment was meant to replace.¹¹ Reimbursements that make you whole for money you already spent — an engine repair, a tow, a rental — are generally not taxable income. A warranty repair carries no tax consequence because no cash changes hands. Flat inconvenience or goodwill payments are harder to exclude and would generally be treated as taxable income; you may receive a 1099. If you received substantial settlement payments, a tax professional can help you report them correctly.

One last boundary worth naming: the deadlines to opt out or object to these settlements have long passed — August 7, 2023, for the Kia E2 settlement and earlier for the others. If you did not exclude yourself, you receive the benefits described above and give up the right to bring your own individual lawsuit against Hyundai or Kia over the same engine defect issues. That tradeoff has already been made; what remains is making full use of the warranty and the 90-day reimbursement window when a failure actually happens.

1
Hyundai Theta Engine Settlement. Hyundai Theta Engine Settlement
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Kia Engine Settlement. Notice of Proposed Class Settlement
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Hyundai Engine II Class Action Settlement. Hyundai Engine II Class Action Settlement
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Kia Engine Class Settlement. Kia E2 Settlement
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Hyundai. Powertrain Extended Warranty
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Kia Engine Class Settlement. Owners Pamphlet
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Kia. New Theta II Class Action Claim
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Kia Engine Settlement. Submit a Claim
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BBB National Programs. Information and Rules for Claim Denials Under Kia E2
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BBB National Programs. Hyundai Engine Settlement Theta Class Action
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Internal Revenue Service. Tax Implications of Settlements and Judgments