Nationwide 2.65M Settlement Over Reduced New Mexico Underinsured Motorist Claims

The lawsuit centers on how underinsured motorist (UIM) coverage worked for some Nationwide auto policyholders in New Mexico between Oct. 1, 2010, and March 31, 2022. UIM coverage is meant to help when an at-fault driver’s liability insurance isn’t enough to cover an injured person’s damages, but disputes often arise over whether the insurer can “offset” (reduce) what it pays by the amount already paid by the at-fault driver’s insurer. Plaintiffs alleged Nationwide applied such offsets to UIM claims and, crucially, didn’t properly disclose that practice to policyholders, leaving consumers with smaller payouts than they expected from the coverage they purchased. The case was filed as a class action because the alleged conduct affected many customers in a similar way, raising common questions about contract language, disclosures, and claims handling practices. Nationwide agreed to a $2.65 million settlement while denying wrongdoing, with two main forms of relief: eligible “offset subclass” claimants can seek up to $25,000 (subject to a capped pool that may be reduced pro rata), while other New Mexico UM/UIM policyholders during the period may receive an automatic partial premium refund. Beyond the dollars, the settlement highlights broader consumer-protection and insurance “bad faith” themes seen in other UM/UIM disputes nationwide—especially fights over offsets, stacking, and what insurers must clearly communicate at purchase and at claim time—against the backdrop of New Mexico insurance rules and the state’s Unfair Trade Practices Act, which can penalize misleading or unfair business practices in consumer transactions including the sale and administration of insurance policies.