AAA Insurance $4.15M Class Action Settlement, Claim Deadline is April 29, 2026, What New Mexico Policyholders Need to Know
Interinsurance Exchange of the Automobile Club, also known as AAA, agreed to pay $4.15 million to settle a class action lawsuit filed by New Mexico policyholders. The plaintiff alleged AAA failed to properly inform policyholders that it would reduce or offset underinsured motorist benefits by amounts received from the at-fault driver’s insurer — in violation of New Mexico law.
The case is captioned Smith v. Interinsurance Exchange of the Automobile Club, Case No. 1:22-cv-00447-WJ-JMR, filed in the U.S. District Court for the District of New Mexico. New Mexico residents who purchased AAA auto insurance with uninsured/underinsured motorist (UM/UIM) coverage or had a UIM claim reduced by AAA between January 1, 2010, and May 4, 2022, may be eligible for a cash payment of up to $25,000 or a partial premium refund. The claim deadline is April 29, 2026.
Quick Facts
- Lawsuit type: Class action — insurance contract breach / underinsured motorist coverage / New Mexico insurance law violations
- Defendant: Interinsurance Exchange of the Automobile Club (AAA)
- Case name: Smith v. Interinsurance Exchange of the Automobile Club aka AAA
- Case number: 1:22-cv-00447-WJ-JMR
- Court: U.S. District Court for the District of New Mexico
- Settlement status: Proposed (pending final approval)
- Settlement fund: $4,150,000
- Who may be affected: New Mexico residents who purchased an AAA auto insurance policy with UM/UIM coverage between January 1, 2010, and May 4, 2022, or had a UIM claim offset by AAA during that period
- Maximum compensation: Up to $25,000 for reduced UIM claimants; partial premium refund for UM/UIM purchasers
- Opt-out deadline: March 30, 2026
- Claim deadline: April 29, 2026
- Final approval hearing: TBD
- Official settlement website: AAAUIMSettlement.com
- Administrator: Epiq Global
Current Status & What Happens Next
The settlement is currently open for claims. Here is what is happening now and what comes next:
- Claims open now — eligible class members with reduced UIM claims can file online or by mail
- Opt-out deadline: March 30, 2026
- Claim deadline: April 29, 2026
- Final approval hearing: TBD — check AAAUIMSettlement.com for updates
- Payments: The settlement administrator will issue payments after it completes claim processing and the court grants final approval of the settlement.
To opt out: Mail a written exclusion request to the settlement administrator postmarked no later than March 30, 2026. Opting out means you receive no settlement benefits but retain the right to pursue your own individual claims against AAA.
Important note for premium refund class members: Class members who purchased UM/UIM coverage but did not have a reduced claim do not need to submit a claim form to receive a payment. Their payments will be distributed automatically based on AAA’s records.
What the Lawsuit Alleges
AAA — formally the Interinsurance Exchange of the Automobile Club — is one of the largest auto insurers in the United States. In New Mexico, it sold automobile insurance policies that included uninsured and underinsured motorist (UM/UIM) coverage, which is designed to protect drivers when the at-fault party in an accident does not carry enough insurance to cover the injured driver’s full damages.
This class action lawsuit alleged AAA breached its insurance contracts and violated New Mexico law by failing to properly inform policyholders that it would reduce underinsured motorist benefits by the amount the at-fault driver’s insurer paid. In other words, if a policyholder was in an accident and the at-fault driver’s insurance paid out a certain amount, AAA would subtract — or “offset” — that payment from whatever UIM benefits the policyholder was entitled to under their own AAA policy. Plaintiffs argued they were never adequately told this would happen when they purchased coverage.
Beyond breach of contract, the plaintiff also claimed AAA was negligent, was unjustly enriched, breached the duty of good faith and fair dealing, engaged in negligent misrepresentation, and violated the New Mexico Unfair Trade Practices Act and Unfair Insurance Practices Act.
The lawsuit drew directly on a landmark 2022 New Mexico Supreme Court ruling. In Crutcher v. Liberty Mutual Insurance Co., 2022-NMSC-001, the New Mexico Supreme Court found that underinsured motorist coverage at its minimum liability limits is “illusory” because it will not provide additional benefits to policyholders injured in an accident involving a motorist with the same minimum amount of insurance. The court ruled that insurers must provide policyholders with a clear disclosure about this limitation.
The New Mexico Supreme Court subsequently held in the Smith case that its Crutcher disclosure ruling applies retroactively — a ruling that directly strengthened the plaintiffs’ position and paved the way for the settlement.
AAA denies any wrongdoing but agreed to settle to avoid further litigation and a possible trial.
Who Could Be Included
Class members must meet one or both of the following criteria: AAA reduced or offset their underinsured motorist claim by the amount paid by the at-fault driver in an accident that occurred between January 1, 2010, and May 4, 2022; or they purchased a New Mexico automobile insurance policy from AAA that included UM/UIM coverage between January 1, 2010, and May 4, 2022. Policyholders who only purchased UM/UIM coverage do not need to have made a UIM claim to be eligible.
The settlement covers two distinct groups with different benefits:
- Group 1 — Reduced/offset UIM claimants: Policyholders whose UIM claim was reduced by AAA by the amount the at-fault driver’s insurer paid. These class members must file a claim to receive compensation.
- Group 2 — UM/UIM coverage purchasers: Policyholders who purchased AAA UM/UIM coverage in New Mexico during the class period but did not have a claim reduced. These class members are automatically eligible for a partial premium refund without filing a claim.
If you received a settlement notice with a unique ID and PIN from Epiq Global, you are already identified as a class member.
Settlement Details
Total Fund & Breakdown
The $4,150,000 settlement fund covers the following: attorneys’ fees of $1,383,195; attorneys’ expenses of up to $5,000; a service award to the class representative of $10,000; payments to approved claimants with reduced UIM claims of up to $1,400,000; and payments to class members who purchased UM/UIM coverage from the remaining settlement funds.
What You Could Receive
Group 1 — Reduced UIM claimants (up to $25,000): Class members who submitted a UIM claim that AAA reduced can submit a claim to receive a pro rata cash payment of up to $25,000. The settlement administrator will determine the final payment amount based on the number of valid claims filed.
Group 2 — UM/UIM coverage purchasers (partial premium refund): Class members who purchased UM/UIM coverage but did not have a reduced claim can submit a claim — or will automatically receive — a partial refund of the premiums they paid during the class period. The settlement administrator will determine the final payment amount based on the number of claims filed and other factors.
How to File a Claim
Group 1 (reduced UIM claimants) must file a claim:
- Online: Log in at AAAUIMSettlement.com/Login using the unique ID and PIN from your settlement notice
- By mail: Download the PDF claim form at AAAUIMSettlement.com and mail to:
Smith v. AAA Settlement Administrator PO Box 5339 Portland, OR 97208-5339
- Phone: 1-877-268-1879
- Deadline: April 29, 2026
Group 2 (UM/UIM coverage purchasers) do not need to file a claim to receive their partial premium refund — payments will be issued automatically.
Claimants must certify under penalty of perjury that they made an underinsured motorist claim that AAA reduced by the at-fault driver’s insurance payment.
Payout options: Check mailed to the address provided, or electronic payment.
Prior Cases / Context
The Smith v. AAA settlement is the direct product of years of New Mexico insurance law development centered on the fairness of UIM offset provisions. The foundational issue — that policyholders who purchased UIM coverage at minimum limits effectively received no additional UIM benefits when in an accident with a driver carrying the same minimum coverage — was first identified in Weed Warrior Services v. Alarm One, 2010-NMSC-050, and was comprehensively addressed in Crutcher v. Liberty Mutual in 2022.
The New Mexico Supreme Court held in Smith that the Crutcher disclosure requirement applies retroactively, meaning insurers could be held liable for failing to disclose UIM offset limitations on policies sold years before the 2022 ruling. This retroactive application directly created the legal basis for class action claims like Smith v. AAA covering policies dating back to 2010.
The New Mexico Supreme Court noted that UM/UIM insurance is intended to protect motorists when the other driver lacks enough insurance to cover a person’s injuries and damages, and ruled that insurers must provide customers with a disclosure about the shortcomings of minimum underinsured motorist coverage.
Other major insurers operating in New Mexico faced — or may still face — similar litigation following the retroactive application ruling. AAA’s $4.15 million settlement represents one of the first major class action resolutions under the post-Crutcher legal framework.
Frequently Asked Questions
Is the AAA underinsured motorist lawsuit a class action?
Yes. Smith v. Interinsurance Exchange of the Automobile Club aka AAA, Case No. 1:22-cv-00447-WJ-JMR, is a federal class action filed in the U.S. District Court for the District of New Mexico. It covers New Mexico residents who purchased AAA UM/UIM auto insurance or had a UIM claim offset by AAA between January 1, 2010, and May 4, 2022.
Has the settlement been approved?
The settlement is proposed and currently open for claims, pending final court approval. The final approval hearing date is to be determined — check the official settlement website for updates.
Who is eligible to file a claim?
You are eligible if you had a New Mexico AAA auto insurance policy with UM/UIM coverage between January 1, 2010, and May 4, 2022, or if AAA reduced or offset your UIM claim during that period. You do not need to have filed a UIM claim to qualify for the premium refund benefit.
How much could I receive?
Class members with a reduced UIM claim may receive a pro rata cash payment of up to $25,000. Class members who only purchased UM/UIM coverage without a reduced claim may receive a partial premium refund. Final amounts depend on the total number of valid claims filed.
Do I need to file a claim to receive a payment?
Only class members with a reduced UIM claim need to file a claim form. Class members who purchased UM/UIM coverage but did not have a reduced claim do not need to submit a claim to receive a payment.
What is the claim deadline?
The deadline to submit a claim — online or by mail postmark — is April 29, 2026.
What is the opt-out deadline?
The opt-out deadline is March 30, 2026. Requests to be excluded from the settlement must be mailed and postmarked by that date.
Where is the official settlement website?
The official settlement website is AAAUIMSettlement.com, administered by Epiq Global and supervised by class counsel.
What happens if I do nothing?
If you are a Group 1 class member (reduced UIM claimant) and do nothing, you will not receive a payment and will give up your right to bring your own legal claims against AAA over the issues in this lawsuit. If you are a Group 2 class member (UM/UIM purchaser only), you will automatically receive a partial premium refund even if you do nothing — but you will still give up your right to bring separate claims.
Additional Context
The Smith v. AAA case is part of a broader national trend of insurance law reform focused on the transparency and fairness of underinsured motorist coverage provisions. New Mexico’s Supreme Court has been among the most active state supreme courts in the country in addressing UM/UIM coverage issues, finding on multiple occasions that minimum-limit UIM coverage can render the coverage essentially illusory for policyholders injured in accidents involving drivers with minimum liability limits.
The retroactive application of the Crutcher disclosure rule — affirmed in this very case by the New Mexico Supreme Court in October 2024 — creates significant exposure for other insurers that sold UM/UIM policies in New Mexico without adequate disclosures prior to 2022. Consumer advocates and policyholders in New Mexico who purchased UM/UIM coverage from any insurer during the relevant time period should be aware that similar class actions may follow against other carriers.
Last Updated: March 6, 2026
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Legal claims and outcomes depend on specific facts and applicable law. For advice regarding a particular situation, consult a qualified attorney.
About the Author
Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
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