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Widows often see rise in auto insurance rates, study finds

McClatchy-Tribune Information Services

August 24, 2015


Women whose husbands die should not expect to receive much sympathy from many of the nation’s major auto insurers; it’s more likely that widows can expect to have their car insurance rates raised.

The Washington, D.C.-based Consumer Federation of America found most major automobile insurance companies vary their prices depending on marital status.

"It surprised us especially that when a husband dies, most major auto insurers would increase the premiums for the surviving widow," said Stephen Brobeck, executive director of the consumer federation. "Most of the major insurers charge all single people — whether they’ve never been married, separated, divorced or widowed — higher rates than those who are married.

"Insurers claim that married people are safer drivers," he said. "But there are no publicly available studies that have shown that, and we are not aware that state insurance departments have insisted that auto insurers prove there is a causal relationship."

In the 10 cities studied, four of six major insurers — Geico, Farmers, Progressive and Liberty — increased rates on state-mandated liability coverage for widows by an average 20 percent. The fifth insurer, Nationwide, sometimes increased rates for widows.

The sixth insurer, State Farm, did not vary the rates it charged because of marital status. All State Farm rate quotes were the same regardless of whether the driver was single, separated, divorced, widowed, a domestic partner or married.

The consumer federation research did not compare similar rate increases for men who lost a spouse or single men in general.

The hypothetical person that the consumer group used in its research on insurance pricing was a 30-year-old female who has been driving since age 16 with no accidents or moving violations. She has a high school diploma, works as a bank teller and drives a 2005 Honda Civic, which she owns. She also lives in a ZIP code with a $30,000 median household income and has insurance most recently purchased three years ago.

In the study, the researchers also increased the widow’s age to 50 and found the price differences persisted.

"Unfortunately, it’s not unusual that the insurance industry is using socio-economic factors rather than how we drive to price auto insurance," said Robert Hunter, director of insurance for the consumer group and former insurance commissioner for the state of Texas. "The public has indicated in surveys that rates should be based on how you drive, and we agree with that."

The cities studied in the survey are Baltimore; Tampa, Fla.; Louisville, Ky.; Chicago; Minneapolis; Houston; Denver; Oakland, Calif.; Portland, Ore.; and Phoenix.

The research used quotes from the websites of the auto insurers for the minimum liability insurance required by states. For each quote in the 10 cities, all car driver and insurance characteristics were held constant except for marital status.

According to Ronald Ruman, press secretary for the Pennsylvania Insurance Department, the issue of whether a driver is married or single is a valid statistical pricing method because studies show married drivers are a lower risk.

However, he said, Insurance Commissioner Teresa Miller has taken steps to protect widows and widowers from being unfairly charged higher rates.

"If the Insurance Department finds that widows and widowers are rated using the higher single driver rate, we ask the insurance company to support its rating of widows and widowers in this manner," Ruman said. "If the insurance company is unable to do so, we will ask the company to amend its filing so widows and widowers are rated using the lower married driver rates."

Established in 1968 to advance consumer interests through research, advocacy and education, the Consumer Federation of America represents about 300 consumer groups across the nation.

The organization is calling for state insurance departments to investigate the issue. It will share the findings of the study with all state insurance departments and with the Federal Insurance Office, which is considering the issue of insurance affordability.

"The ‘widow penalty’ and other pricing related to marital status provides still another reason for state insurance departments to examine insurer pricing more carefully," Hunter said.