"stacked" car insurance is plausibly deceptive as useless for single vehicle

Peck v. Progressive Northern Ins. Co., 2023 WL 2712390, --- F.Supp.3d ----, No. 1:22-cv-00490-KWR-JFR (D.N.M. Mar. 30, 2023)

Peck bought stacked uninsured/underinsured motorist (“UM/UIM”) coverage on a single vehicle policy. Stacked UM/UIM coverage permits an insured to aggregate the UM/UIM coverages on all vehicles insured under a policy. But Peck alleged that stacked UM/UIM coverage on a policy insurance for a single vehicle is illusory because the insured receives no benefit for the additional premium.

The court thus declined to dismiss Peck’s claim under New Mexico’s Unfair Insurance Practice Act (“No person shall willfully collect any sum as premium or charge for insurance or other coverage, which insurance or coverage is not then provided or in due course to be provided (subject to acceptance of the risk by the insurer) by a policy issued by an insurer as authorized by the Insurance Code.”). Insurance companies “have a duty to disclose material facts about the policies they sell under the UIPA.”

Defendants argued that there was a tangible benefit because the coverage available automatically increases if the policyholder gets an additional vehicle, but there was an additional premium due if that happened and the policyholder had the burden of notifying Progressive. And insureds were entitled to stacking by default, unless there was a written rejection. So it was unclear if there was any benefit to stacking a single-vehicle policy. Plus, even if it wasn’t illusory, it could still be deceptive for failing to disclose that there was no benefit to stacking a single-vehicle policy.

There was no breach of contract claim, but possibly breach of the implied covenant of good faith and fair dealing claim, unjust enrichment, and a New Mexico Unfair Trade Practices Act claim for the same reasons.