For many drivers, purchasing underinsured motorist coverage provides a crucial safety net, a promise of financial protection in the event of an accident with someone who lacks adequate insurance. A recent class action settlement, however, has brought to light allegations that this promise was not always fulfilled for certain policyholders in New Mexico. Loya Insurance Company and its affiliate, Young America Insurance Co. (YAIC), have agreed to create a $1.95 million settlement fund to resolve a lawsuit claiming the companies misrepresented their UIM policies and systematically reduced claim payouts. While the insurers have consented to the terms of the settlement, this agreement does not serve as an admission of wrongdoing or liability on their part. The legal action, which consolidates two separate cases, Apodaca v. Young America Insurance Co. and Swiech v. Loya Insurance Co., is being adjudicated in the U.S. District Court for the District of New Mexico. The court is now overseeing the settlement process and has scheduled a final approval hearing to formalize the agreement and bring the matter to a close.
The Heart of the Dispute: Allegations and Class Definition
The Core Allegations Against Loya and YAIC
The central issue in the class action lawsuit revolved around the insurers’ application of a practice known as an “offset” to underinsured motorist claims. According to the plaintiffs, Loya Insurance and its affiliate systematically diminished the UIM benefits payable to their policyholders. This reduction was allegedly based on the insurance coverage limits of the third parties deemed responsible for the bodily injuries or property damage sustained in an accident. The lawsuit contended that this offset mechanism was not only concealed from policyholders when they purchased their coverage but was also in direct contravention of New Mexico state law. By applying these undisclosed offsets, the insurers were accused of effectively misrepresenting the genuine value and scope of the UIM coverage they sold. This practice created a significant discrepancy between the level of protection a customer believed they were purchasing and the actual benefit they could receive after an incident, fundamentally altering the nature of the insurance product.
The consequences of this alleged practice directly impacted policyholders at their most vulnerable moments. Individuals who had diligently paid premiums for UIM coverage, believing they were securing a specific level of financial protection, found their expected benefits significantly reduced when they needed them most. When a policyholder filed a claim, the actual payout was diminished by an amount equal to the at-fault party’s insurance coverage limit. This allegedly left many individuals with substantially less compensation than they were entitled to under their policy terms and state regulations. Such a practice fundamentally undermines the core purpose of underinsured motorist coverage, which is specifically designed to bridge the gap when an at-fault driver’s insurance is insufficient to cover the full extent of the damages. The lawsuit argued that this left policyholders exposed to unexpected financial hardship, forcing them to cover medical bills and other losses that their own insurance policy should have addressed.
Defining the Eligible Class Members
The settlement agreement has carefully established a specific set of criteria to identify who is eligible to participate as a “Class Member” and receive benefits from the fund. To qualify, an individual is required to meet a series of conditions without exception. First, the person must have been a policyholder with either Young America Insurance Co. or Loya Insurance Co. Secondly, the policyholder must have been a resident of New Mexico during the relevant time frame covered by the lawsuit. Furthermore, the insurance policy in question must have included Uninsured/Underinsured Motorist (UM/UIM) coverage. The final criterion relates to the timing of the purchase; the UM/UIM coverage must have been acquired at any point within the class period, which spans from October 1, 2010, to February 28, 2022. These clear parameters ensure that the settlement benefits are directed specifically to the group of consumers allegedly affected by the disputed insurance practices within the state of New Mexico during the specified years.
The definition of the class is intentionally inclusive, designed to encompass all policyholders who were potentially harmed by the alleged offset practice. It specifically covers individuals who, after purchasing their qualifying coverage, proceeded to file underinsured motorist claims. Most critically, the class includes those whose UIM claims for benefits were either significantly reduced or outright denied as a direct result of the application of the contested and allegedly undisclosed third-party insurance offsets. This focus ensures that individuals who experienced a tangible financial impact from the practice are central to the resolution. By defining the class in this manner, the settlement aims to provide a pathway to compensation for those who not only purchased the policies under potentially misleading terms but also suffered direct financial consequences when they attempted to use the coverage for its intended purpose following an accident with an underinsured motorist.
Settlement Options and Important Deadlines
Compensation Choices for Policyholders
Under the terms of the comprehensive $1.95 million settlement, eligible Class Members were presented with two distinct options for receiving compensation, allowing them to choose the path that best aligned with their specific circumstances. The first option was primarily designed for individuals who had previously filed a UIM claim that was negatively impacted by the offset practice. These Class Members could elect to have their prior bodily injury and/or property damage UIM claims re-evaluated and readjusted without the application of the disputed third-party offset. A substantial portion of the settlement fund, specifically $800,000, was earmarked to cover all approved UIM claim readjustments. The potential individual award under this option varied, depending on the unique details of the original claim, such as the extent of damages and the original policy limits. To pursue this benefit, a Class Member was required to submit a valid and timely claim form for consideration.
For Class Members who either did not file a UIM claim during the class period or who did not wish to have a prior claim readjusted, a second compensation option was made available. These individuals could opt to receive a direct monetary refund. This payment represented a partial reimbursement of the uninsured/underinsured motorist (UM/UIM) premiums they paid to either Loya Insurance or Young America Insurance Co. during the established class period, from October 1, 2010, to February 28, 2022. The exact amount of each individual’s refund was not a fixed sum but was calculated proportionally. This calculation was based on the total amount of UM/UIM premiums that the specific Class Member paid during the nearly twelve-year timeframe. This alternative ensured that all eligible policyholders, regardless of their claims history, had an opportunity to receive a tangible benefit from the settlement fund as compensation for the premiums paid for coverage that was allegedly misrepresented.
Key Dates and Procedural Information
The resolution of this class action lawsuit hinged on a structured process with firm deadlines that Class Members were required to meet in order to participate. All eligible individuals seeking to receive a benefit, whether a claim readjustment or a premium refund, were mandated to complete and submit a valid claim form. The final day for the settlement administrator to receive these forms was March 12, 2026. For those who wished to pursue their own individual lawsuit or were unsatisfied with the terms of the agreement, two other important dates were established. The deadline for Class Members to exclude themselves from the settlement or to file an objection was January 26, 2026. Following these procedural milestones, the court scheduled a final approval hearing for March 24, 2026, where it reviewed the settlement to confirm that its terms were fair, reasonable, and adequate for the class.
The administration of the settlement was managed by a neutral third party to ensure impartiality and efficiency throughout the process. The “Swiech and Apodaca v. Loya Settlement Administrator” was designated to handle claims processing, distribute official notices, and address inquiries from Class Members. Throughout the litigation, the plaintiffs were represented by a team of legal counsel from several law firms, including the Law Office of Kedar Bhasker LLC and Romero, Harada, Winters LLC. On the other side, the defendants, Loya Insurance Co. and Young America Insurance Co., were represented by Michael E. Mumford of the law firm Baker Hostetler LLP. This legal framework provided that both sides were professionally represented as the case progressed from its initial filing through to its ultimate resolution and the disbursement of the settlement fund to eligible policyholders across New Mexico.
