Pennsylvania Insurance Commissioner Teresa Miller issued a consumer alert announcing that she will not approve auto insurance rate filings that contain the so-called “widow’s penalty,” under which a widow or widower is charged a higher rate solely based on the change in his or her marital status.
“Raising auto premiums in this situation is unfair, and if the insurer cannot provide statistical support for including widows and widowers in the higher single rate category, I will not approve the rate change, and require the insurer to continue to use the lower rate,” Miller said Wednesday.
Miller said several recent news stories have highlighted the widow’s penalty issue as it pertains to auto insurance. She said that some insurers have been able to show through statistical evidence that single drivers incur higher claims costs on average than married drivers, and therefore those insurers charge single drivers more. Some companies that use this rating factor have included widows and widowers in the single driver category, resulting in premium increases following the loss of a spouse.
Miller went on to remind consumers that marital status is not the only reason auto premiums can change following the loss of a spouse. When a couple is on a policy, their driving records are considered together when determining the premium. When one spouse dies, the premium will change to reflect the risk of the remaining driver. If that driver has a better driving record than his or her spouse, the premium may go down. However, the premium could go up if that driver has a worse driving record, with more accident claims filed in the past.
Additionally, many companies offer multi-policy discounts, such as for having both life and auto policies with that company. If one of those policies ends, such as a life insurance policy after a spouse dies, that discount may be cancelled, Miller said.
The commissioner stated that while her policy only applies to rate reviews going forward, and does not apply to any previously approved rate filing that uses this type of rating calculation, some companies have used a rating based on marital status. Therefore the Insurance Department encourages any consumer experiencing this type of rate increase to look at their options.
Pennsylvania has a large auto insurance market, with more than 200 companies providing this type of coverage in the state. Miller advised any consumers with questions about a changing auto premium to call their insurer. She also suggests that any unsatisfied consumer shop around to get quotes from other auto insurance companies.
Source: The Pennsylvania Insurance Department
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