Premium-Based Injury Confers Standing, But Enforcement Is the Remedy: Idaho Supreme Court Limits Claims Arising from Illusory UIM Coverage

Premium-Based Injury Confers Standing, But Enforcement Is the Remedy: Idaho Supreme Court Limits Claims Arising from Illusory UIM Coverage

Case: Gilbert v. Progressive Northwestern Insurance Co., Docket No. 51467

Court: Supreme Court of Idaho

Date: October 3, 2025

Author: Meyer, J.

Disposition: Judgment affirmed; costs to Progressive.

Introduction

In a closely watched follow-on to Pena v. Viking Insurance Co. of Wisconsin, the Idaho Supreme Court addressed whether an insured who purchased allegedly illusory underinsured motorist (UIM) coverage may pursue claims for breach of contract, breach of the implied covenant of good faith and fair dealing (bad faith), unjust enrichment, and fraud—without ever submitting, being delayed on, or being denied a UIM claim. The plaintiff, Noah Gilbert, bought UIM coverage with minimum $25,000/$50,000 limits and an “offset” feature. He alleged that, under Pena, such minimum-limits UIM coverage coupled with an offset provision is illusory and that Progressive sold a product that would never pay.

The Court rendered two principal holdings. First, it clarified Idaho standing doctrine: a policyholder who paid premiums for allegedly illusory coverage suffers a concrete, particularized economic injury sufficient to confer standing—even absent a filed or denied claim. Second, it affirmed summary judgment for the insurer on all merits theories because Gilbert never submitted a claim, Progressive never denied or delayed payment, and Gilbert could not show damages. The Court reiterated that the appropriate remedy for illusory UIM terms is enforcement of the policy in the insured’s favor (treating the coverage as excess), not rescission or restitution of premiums.

Summary of the Opinion

  • Standing: The Court held Gilbert has standing. The payment of premiums for allegedly illusory coverage constitutes a concrete, particularized economic injury that is fairly traceable to the insurer’s conduct and redressable by favorable judgment.
  • Breach of contract and bad faith: Summary judgment for Progressive. Without a submitted claim and denial or delay, Gilbert cannot prove breach of contract or breach of the implied covenant of good faith and fair dealing.
  • Fraud and constructive fraud: Summary judgment for Progressive. Gilbert failed to establish damages—an essential element—because he never experienced a covered loss or denial of coverage; premium payments alone did not amount to actionable fraud damages on these facts.
  • Unjust enrichment: Summary judgment for Progressive. Although an express contract does not invariably foreclose unjust enrichment, equitable restitution is inappropriate where an enforceable contract provides a legal remedy. Under Pena, the remedy for illusory UIM terms is enforcement as excess coverage, not premium refund.
  • Class certification: Denied as moot after summary judgment; affirmed by implication.

Factual and Procedural Background

Gilbert insured one vehicle with Progressive beginning in September 2021, carrying minimum liability limits ($25,000 per person/$50,000 per accident). Initially rejecting UIM coverage in writing, he added a $25,000/$50,000 UIM endorsement a month later via Progressive’s app. The endorsement contained an “offset” clause reducing UIM benefits by amounts paid by the at-fault driver’s insurer. Idaho Department of Insurance-approved disclosure forms explained the distinction between “difference in limits/offset” and “excess” UIM coverage.

After the Court’s 2022 decision in Pena v. Viking—holding that minimum-limits UIM coverage later nullified by policy terms is illusory and must be enforced in the insured’s favor—Gilbert filed a putative class action claiming Progressive knowingly sold illusory UIM coverage. He sought damages and fees on contract and tort theories and restitution for unjust enrichment. He never alleged any accident, UIM claim, denial, or delay.

Progressive moved for summary judgment, arguing: (1) Gilbert lacked standing; (2) he never filed a claim or suffered a denial; (3) after Pena, Progressive honored minimum-limits UIM as “excess,” consistent with public policy and Idaho law; and (4) Pena prescribes enforcement as the remedy, not rescission or premium refunds. The district court raised standing sua sponte and ultimately held Gilbert lacked standing and, in the alternative, that his claims fail on the merits. It granted summary judgment for Progressive and denied class certification as moot. Gilbert appealed.

Analysis

Precedents Cited and Their Role

  • Pena v. Viking Insurance Co. of Wisconsin, 169 Idaho 730, 503 P.3d 201 (2022): Central to the case. Pena held that when minimum-limits UIM coverage is offered, paid for, and then effectively excluded, the coverage is illusory. Remedy: enforce coverage in the insured’s favor (e.g., as excess), not rescission. Progressive asserted—and the Court credited—that it has treated minimum-limits UIM with offset as excess coverage post-Pena.
  • Standing authorities:
    • Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992): Federal three-part standing test (injury-in-fact, causation, redressability); adopted in Idaho as a prudential matter.
    • Spokeo, Inc. v. Robins, 578 U.S. 330 (2016): Particularization and concreteness requirements.
    • TransUnion LLC v. Ramirez, 594 U.S. 413 (2021): Monetary harm is a paradigmatic concrete injury.
    • Czyzewski v. Jevic Holding Corp., 580 U.S. 451 (2017): Even small monetary harms suffice.
    • Food & Drug Admin. v. Alliance for Hippocratic Medicine, 602 U.S. 367 (2024): Clarifies concreteness versus speculation.
    • Persuasive circuit authority on premium-based injury for void/illusory insurance: Dubuisson (2d Cir.), Graham (8th Cir.), Hallums (11th Cir.).
  • Bad faith and contract principles:
    • White v. Unigard, 112 Idaho 94, 730 P.2d 1014 (1986); Rizzo v. State Farm, 155 Idaho 75, 305 P.3d 519 (2013): Implied covenant of good faith and fair dealing in insurance contracts.
    • ABK, LLC v. Mid-Century Ins. Co., 166 Idaho 92, 454 P.3d 1175 (2019): Elements of bad faith; core requirement of denial/delay and coverage.
    • Robinson v. State Farm, 137 Idaho 173, 45 P.3d 829 (2002): Plaintiff must establish coverage to prevail on bad faith.
  • Fraud/constructive fraud: Thurston Enterprises v. Safeguard, 164 Idaho 709, 435 P.3d 489 (2019); Taylor v. McNichols, 149 Idaho 826, 243 P.3d 642 (2010); Choice Feed v. Montierth, 168 Idaho 124, 481 P.3d 78 (2021): Fraud elements, including damages; constructive fraud relaxes knowledge/intent but still requires injury and reliance.
  • Unjust enrichment and equitable remedies:
    • Bates v. Seldin, 146 Idaho 772, 203 P.3d 702 (2009): Existence of a contract does not categorically bar unjust enrichment; bar applies when the express agreement is enforceable.
    • Asher v. McMillan, 169 Idaho 701, 503 P.3d 172 (2021): Restitutionary remedies are generally subordinate to contractual remedies; focus is whether retention lacks adequate legal basis.
    • Iron Eagle Development v. Quality Design Systems, 138 Idaho 487, 65 P.3d 509 (2003): Adequate legal remedy generally forecloses equitable claims.
  • Policy enforcement when provisions violate public policy: Martinez v. ICRMP, 134 Idaho 247, 999 P.2d 902 (2000); Williams v. Continental Life, 100 Idaho 71, 593 P.2d 708 (1979). Courts sever offending provisions and enforce the policy to meet statutory purposes and insureds’ reasonable expectations—an approach reaffirmed in Pena and applied here.

Legal Reasoning

1) Standing: premium-based economic injury suffices

The Court embraced a pragmatic application of federal standing doctrine. On injury-in-fact, Gilbert’s payment of premiums for purportedly illusory coverage is a concrete and particularized economic harm, not a speculative future injury. The Court emphasized that this injury accrues at purchase; it does not hinge on a future accident or claim denial. Causation was straightforward (Progressive sold the offset policy; Gilbert paid for it), and redressability was satisfied (a favorable judgment could award monetary relief).

Important nuance: The Court distinguished the threshold question of standing from the merits. That Gilbert ultimately could not recover damages on his tort and contract claims did not negate his standing; standing asks whether there is a concrete injury and a potential remedy—not whether the plaintiff will win on the elements of each cause of action.

2) Breach of contract and bad faith: no denial or delay, no breach

An insurance policy is a risk-shifting contract; duties to pay and to adjust are triggered by covered claims. Bad faith requires proof that the insurer unreasonably denied or delayed payment of a covered claim, that the claim was not fairly debatable, that the denial/delay was not a good-faith mistake, and that non-contract damages resulted. Because Gilbert never submitted a UIM claim, Progressive neither denied nor delayed payment. Without that triggering conduct, neither a contract breach nor a breach of the implied covenant could be established.

The Court underscored that—even had Gilbert filed a claim—Pena dictates enforcement in the insured’s favor by treating minimum-limits UIM with offset as excess coverage. Thus, the “benefit of the bargain” would not be nullified; it would be judicially preserved by enforcing coverage. Absent an actual claim and denial, there was no impingement of contractual benefits to ground a breach.

3) Fraud and constructive fraud: failure of the damages element

Fraud requires a false statement (or omission), reliance, and consequent injury. Constructive fraud relaxes knowledge and intent when a relationship of trust exists, but it still requires harm. Gilbert argued that Progressive misrepresented (or concealed) the true value of UIM coverage by selling an endorsement that would never pay. The Court held that the necessary injury was absent. Gilbert never suffered a covered loss, never made a claim, and was never denied benefits. In light of Pena, if a loss occurred, the policy would be construed to provide excess coverage. On these facts, premium payments alone were insufficient to establish the tort damages element.

The Court’s reasoning illuminates a key distinction: A monetary injury can be sufficient to open the courthouse doors (standing) while still falling short of the substantive “damages” element of tort claims when no loss event or denial has occurred.

4) Unjust enrichment: equitable restitution yields to enforceable contract remedies

The Court corrected an overbroad proposition often invoked at the trial level: the existence of an express contract does not categorically bar unjust enrichment. Rather, unjust enrichment is barred where the contract is enforceable and provides an adequate legal basis for the retention of benefits. The district court’s categorical view was “erroneous” as a matter of doctrine, but the result was nonetheless correct.

Here, the policy itself remains enforceable, with only the offending UIM terms severed or disregarded as public-policy violations. Following Pena, enforcement—not rescission—is the remedy. Because Gilbert has a legal remedy in the form of policy enforcement should a claim arise, restitution of premiums would be inappropriate. Restitution aims to unwind transactions lacking a valid legal basis; this transaction, as judicially construed, retains a valid legal basis—an enforceable policy with excess UIM protection.

Impact and Practical Implications

  • Standing clarified in Idaho for insurance purchasers: Paying premiums for allegedly void or illusory coverage qualifies as a concrete injury conferring standing to sue, even absent a filed or denied claim. Expect more suits to clear the jurisdictional hurdle at the pleading and summary judgment stages when plaintiffs can document premium payments.
  • Merits guardrails remain stringent:
    • Breach/bad faith: Without an actual claim and denial/delay, these claims will founder. Plaintiffs alleging “illusory coverage” should expect enforcement, not damages, if no denial occurred.
    • Fraud/constructive fraud: Premium payments, by themselves, will rarely satisfy the damages element where the policy will be enforced as excess if a loss occurs. Plaintiffs must connect misrepresentation to concrete loss.
    • Unjust enrichment: Where a policy is judicially enforceable, restitutionary remedies are subordinated to contract enforcement. Premium refund theories are unlikely to succeed absent contract unenforceability.
  • Remedy reaffirmed: Pena’s enforcement-first remedial approach is entrenched. Idaho courts will sever or disregard policy terms that render minimum-limits UIM coverage illusory and enforce the policy to meet statutory policy and insureds’ expectations. Insurers should continue treating minimum-limits UIM with offset as excess coverage.
  • Class actions: Because merits failures can dispose of named plaintiffs’ claims before class certification, class certification motions may be mooted. Plaintiffs contemplating class actions should consider whether they can demonstrate denial/delay or other actual loss to sustain damages-dependent theories.
  • Drafting and disclosures: The DOI-approved forms distinguishing “offset” from “excess” were not themselves the problem; the issue is enforcement. Insurers should ensure that policy administration post-Pena consistently honors minimum-limits UIM as excess to avoid denial-based disputes.

Complex Concepts Simplified

  • Illusory coverage: Insurance that, though nominally purchased, cannot realistically pay benefits because policy terms nullify the promised protection. In Pena and this case, minimum-limits UIM paired with an offset provision could eliminate any payout when the at-fault driver also carries the minimum liability limits. Courts cure the illusory effect by enforcing UIM as excess over the tortfeasor’s limits.
  • Offset vs. excess UIM:
    • Offset/difference-in-limits: UIM limits are reduced by amounts paid by the at-fault driver, potentially reducing the UIM payout to zero at minimum limits.
    • Excess: UIM coverage is added on top of amounts paid by the at-fault driver, preserving meaningful protection.
  • Standing vs. merits: Standing asks whether the plaintiff suffered a concrete, personal, and redressable injury (e.g., paying money). Merits ask whether each element of the claim is proven (e.g., denial/delay for bad faith; damages for fraud). A plaintiff can have standing but still lose on the merits.
  • Bad faith essentials: No bad faith without an actual claim and an unreasonable denial or delay. Mere sale of a problematic policy, without a claim event or handling misconduct, does not constitute bad faith.
  • Unjust enrichment hierarchy: Equity (restitution) yields to law (contract) when an enforceable agreement supplies the governing obligations and remedies. Restitution typically applies only when the transaction lacks a valid legal basis.

Conclusion

Gilbert v. Progressive clarifies a critical threshold rule in Idaho: policyholders who pay premiums for allegedly illusory insurance suffer a concrete economic injury sufficient for standing. Yet the Court simultaneously cabins the path to relief. Absent a submitted claim and a denial or delay, breach and bad-faith theories fail; without demonstrated injury, fraud and constructive fraud cannot proceed; and unjust enrichment is unavailable where an enforceable contract affords a legal remedy—namely, enforcement of coverage as excess consistent with Pena.

The decision harmonizes Idaho’s standing doctrine with federal guidance while reinforcing Pena’s remedial framework: courts will excise illusory features but preserve and enforce coverage to vindicate public policy and insureds’ reasonable expectations. Practically, insureds may access courts to challenge suspect UIM structures, but meaningful damages-based recovery will generally require an actual claim event and adverse coverage action. For insurers, the opinion confirms that treating minimum-limits UIM with offsets as excess coverage remains the compliant and litigation-resistant approach.

Key Takeaways

  • Premium payments for allegedly illusory coverage constitute concrete injury for standing in Idaho.
  • Enforcement, not rescission or premium refund, is the remedy for illusory UIM provisions.
  • No breach or bad faith without a submitted claim and denial or delay.
  • Fraud and constructive fraud still require actual damages tied to misrepresentation; premium payments alone did not suffice here.
  • Unjust enrichment is typically foreclosed when an enforceable contract provides an adequate legal remedy.

Case Details

Year: 2025
Court: Supreme Court of Idaho

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