Insurance Provider Settles Underinsured Motorist Claims for $4.15 Million

AAA (Interinsurance Exchange of the Automobile Club) has agreed to a $4.15 million settlement to resolve a class action lawsuit concerning the handling of underinsured motorist claims for policyholders in New Mexico.

The lawsuit alleged that AAA breached its insurance contracts and violated New Mexico law by reducing underinsured motorist claims by the amount paid by the at-fault driver. This practice, known as an offset, allegedly occurred without properly informing policyholders that their benefits would be reduced by payments from the at-fault driver’s insurer.

Underinsured motorist (UIM) coverage is designed to protect a policyholder when the driver responsible for an accident does not carry sufficient insurance to cover the resulting damages.

Settlement Eligibility and Payouts

The settlement benefits consumers who purchased a New Mexico automobile insurance policy containing uninsured or underinsured motorist coverage between January 1, 2010, and May 4, 2022.

Eligible class members are divided into two distinct groups for the purpose of payouts:

• Consumers who had an underinsured motorist claim reduced or offset by the amount paid by the at-fault driver can submit a claim for a payment of up to $25,000. These payments may be reduced on a pro rata basis depending on the total number of claims filed.
• Consumers who purchased uninsured or underinsured motorist coverage during the class period but did not have a reduced claim may receive a partial premium refund. These refunds will be sent automatically via check in the mail.

The specific amount of the premium refunds will vary based on the cost of administering the settlement, the amount set aside for offset claim payments, the amount the class member paid in premiums, and other factors.

Company Response and Legal Standing

AAA has not admitted any wrongdoing in connection with the settlement. The company denies all allegations and maintains that it complied with its policies and applicable law.

Critical Deadlines and Next Steps

The settlement process includes several key dates for eligible policyholders and objectors:

• The deadline for exclusion and objection was March 30, 2026.
• Class members seeking the payment for offset claims must submit a valid claim form by April 29, 2026.
• The final approval hearing for the settlement is scheduled to take place on or after May 13, 2026.

For the group receiving premium refunds, no claim form is required as these payments will be issued automatically based on AAA records.