AAA $4.15 Million Underinsured Motorist Insurance Class Action Settlement
By Steve Levine
Published: March 5, 2026
Claim Form Deadline: April 29, 2026
Payout: Up to $25,000 (offset claims) or automatic premium refund
Proof required: No (claims verified by AAA records)
What is the AAA Underinsured Motorist Settlement?
If you had a New Mexico auto insurance policy with AAA (Interinsurance Exchange of the Automobile Club) that included underinsured motorist coverage between January 1, 2010 and May 4, 2022, you may be eligible for a cash payment from a $4.15 million class action settlement. There are two groups of eligible people. If AAA reduced your underinsured motorist claim by the amount paid by the at-fault driver's insurance, you can file a claim for up to $25,000. If you simply purchased UM/UIM coverage from AAA during the class period, you will automatically receive a partial premium refund check in the mail without filing anything. The deadline to file a claim for the $25,000 payment is April 29, 2026.The lawsuit alleged that AAA breached its insurance contracts and violated New Mexico law by failing to properly inform policyholders that underinsured motorist benefits would be reduced or "offset" by the amount paid by the at-fault driver's insurer. AAA denies all allegations and maintains it complied with its policies and applicable law.
What is Underinsured Motorist Coverage and Why Does This Matter?
Underinsured motorist (UIM) coverage is a type of auto insurance that is supposed to protect you when the driver who caused your accident does not have enough insurance to cover your damages. For example, imagine you are in a car accident caused by another driver. Your medical bills and damages total $50,000, but the other driver only has $25,000 in liability insurance. If you have UIM coverage, it is supposed to help cover the gap between what the other driver's insurance pays and what your actual damages are.The problem this lawsuit addresses involves something called the "Schmick offset." Under New Mexico law, insurance companies were reducing (or "offsetting") your underinsured motorist benefits by the amount that the at-fault driver's insurance already paid you. So in the example above, if the at-fault driver's insurance paid you $25,000, AAA would then reduce your UIM benefits by that same $25,000, potentially leaving you with nothing from your UIM coverage. This effectively made the UIM coverage you paid for worthless in many situations.
The New Mexico Supreme Court addressed this issue in a 2022 case called Crutcher v. Liberty Mutual, ruling that minimum liability UIM coverage is essentially "illusory" because it provides no additional benefits to policyholders in many common accident scenarios. The Court also ruled in 2024 that this decision applies retroactively to policies sold before the ruling, which is what makes this class action possible going back to 2010.
The core claim in this lawsuit is that AAA failed to properly advise policyholders about this limitation when selling them UM/UIM coverage. In other words, AAA sold you insurance coverage that, because of the offset, may not have actually provided the protection you were paying for, and AAA did not tell you that when you bought the policy.
Who Qualifies for the AAA Settlement?
There are two groups of eligible class members:Offset Subclass Members: You qualify if AAA reduced or "offset" your underinsured motorist claim by the amount paid by the at-fault driver in an accident between January 1, 2010 and May 4, 2022. Note: if the other driver had NO insurance at all, you had an uninsured motorist claim, not an underinsured motorist claim, and you are not eligible for this subclass.
Premium Refund Class Members: You qualify if you purchased a New Mexico auto insurance policy from AAA that included UM/UIM coverage at any time between January 1, 2010 and May 4, 2022.
How Much Money Will I Get?
AAA has agreed to pay $4,150,000 into a settlement fund. How much you receive depends on which group you fall into:Offset Subclass Members can file a claim for up to $25,000 per claim. This amount may be reduced pro rata if the total claims exceed the portion of the fund designated for offset claims.
Premium Refund Class Members will automatically receive a partial refund based on how much they paid in UM/UIM premiums during the class period. The refund amount will be calculated after deducting attorney fees ($1,383,195), the class representative incentive award ($10,000), litigation costs (up to $5,000), administration costs, and any remaining offset claims payments. No action is required to receive this refund.
How Do I File a Claim?
If you are an Offset Subclass Member (your underinsured motorist claim was reduced by the at-fault driver's payment), you must submit a claim form postmarked by April 29, 2026. You can request a claim form by calling the settlement administrator or visiting AAAUIMSettlement.com. All claims will be verified against AAA's business records.If you are a Premium Refund Class Member (you purchased UM/UIM coverage but did not have a claim offset), you do not need to file anything. A check will be mailed to you automatically.
If your address changes within 60 days after the settlement becomes effective, contact the settlement administrator to update your information or you may not receive your payment.
Is Proof Required to File a Claim?
No. You do not need to provide documentation. All claims are verified by the settlement administrator using AAA's own business records. However, knowingly submitting a false claim is a violation of federal law.What are the Important Dates?
Claim Form Deadline: April 29, 2026
Opt-Out Deadline: March 30, 2026
Objection Deadline: March 30, 2026
Final Fairness Hearing: Date to be set by the Court
When Will Payments Be Sent?
Payments will be sent after the Court approves the settlement at the fairness hearing and all appeals are resolved. Offset Subclass Members who file valid claims will receive their payments from the designated portion of the fund. Premium Refund Class Members will receive automatic checks after all other payments and expenses are deducted from the fund.What Happens If I Do Nothing?
If you are a Premium Refund Class Member (you purchased UM/UIM coverage during the class period), you will still automatically receive a partial premium refund check. If you are an Offset Subclass Member and you do nothing, you will miss the opportunity to claim up to $25,000 but will still receive the automatic premium refund portion. In all cases, doing nothing means you remain bound by the settlement terms and give up the right to sue AAA over the same issues.Can I Opt Out of the AAA Settlement?
Yes. The deadline to opt out is March 30, 2026. You must mail a signed written exclusion request including your full name, current address, a statement that you wish to be excluded, and your signature. If you opt out, you will not receive any payment but you keep the right to sue AAA separately. Note: if you file an objection to the settlement, you cannot also opt out. You must choose one or the other.What Was the AAA Underinsured Motorist Lawsuit About?
Joshua Smith filed this class action in 2022 in the U.S. District Court for the District of New Mexico. The lawsuit alleged that AAA breached its automobile insurance contracts, was negligent, unjustly enriched, breached the duty of good faith and fair dealing, engaged in negligent misrepresentation, and violated both the New Mexico Unfair Trade Practices Act and the New Mexico Unfair Insurance Practices Act.The central allegation is that AAA failed to properly inform New Mexico policyholders that their underinsured motorist benefits would be reduced by the amount paid by the at-fault driver's insurer. The lawsuit seeks damages, reformation of the insurance contracts, declaratory judgment, and injunctive relief.
The case was shaped significantly by the New Mexico Supreme Court's 2022 ruling in Crutcher v. Liberty Mutual, which found that minimum UIM coverage is "illusory" in many situations. In October 2024, the New Mexico Supreme Court ruled in a related proceeding that the Crutcher decision applies retroactively, allowing claims going back to 2010.
Case Information
Caption: Joshua Smith v. Interinsurance Exchange of the Automobile Club, aka AAA, Case No. 1:22-cv-00447-WJ-JMR
Court: United States District Court for the District of New Mexico
Class Counsel: Kedar Bhasker (Bhasker Law); Geoffrey Romero (Romero, Harada & Winters); Corbin Hildebrandt (Corbin Hildebrandt, P.C.); Andrea Harris (Valle, O'Cleireachain, Zamora & Harris)
How Do I Find Class Action Settlements?
Find all the latest class actions you can qualify for by getting notified of new lawsuits as soon as they are open to claims:Official Settlement Notice (PDF)
Claim Form Website: AAAUIMSettlement.com
Submit Claim
Sources
• Official Settlement SiteFiling Class Action Settlement Claims
Please note that your claim form will be rejected if you submit a settlement claim with any fraudulent information. By providing this information and your sworn statement of its veracity, you agree to do so under the penalty of perjury. If you are not sure whether you qualify, visit the class action administrator's website. OpenClassActions.com is a consumer advocacy and class action news site, and is not a class action administrator or a law firm.
For more class actions keep scrolling below.
Bayer RoundUp Bug Spray Lawsuits
Status: Open to Claims
Submit Claim
Video Game Addiction Lawsuit
Deadline: Pending
Submit Claim
DraftKings & FanDuel Addiction Lawsuits
Status: Open
Submit Claim
Children playing Roblox and using Discord?
Pre-Qualify Here
Submit Claim
$4.17M RevitaLash Conditioner Settlement
Deadline: April 20, 2026
Submit Claim
$87.5M Beef Prices Settlement
Deadline: June 30, 2026
Submit Claim
Dollar General Bait & Switch Settlement
Deadline: April 13, 2026
Submit Claim
$7.25 Billion RoundUp Bug Spray Settlement
Deadline: Pending
Learn More
Belkin Power Bank Settlement
Deadline: March 30, 2026
Submit Claim
$4.85M Bayer Antifungal Spray Settlement
Deadline: March 11, 2026
Submit Claim
Michael Kors Outlet Class Action Settlement
Deadline: March 20, 2026
Submit Claim
Balance of Nature $9.95M Class Action
Deadline: March 11, 2026
Submit Claim
Depo Provera Investigation
Deadline: Pending
Pre-Qualify| AAA Underinsured Motorist Settlement Summary | |
| Status | Open — File Claim |
|---|---|
| Claim Deadline | April 29, 2026 |
| Opt-Out / Objection Deadline | March 30, 2026 |
| Final Fairness Hearing | Date TBD by Court |
| Settlement Amount | $4,150,000 |
| Estimated Payment | Up to $25,000 (offset claims) or automatic premium refund |
| Proof Required | No (verified by AAA records) |
| Who Qualifies | New Mexico AAA policyholders with UM/UIM coverage (Jan 2010 - May 2022) |
| Website | AAA UIM Settlement |