Your loss shouldn’t be an insurance company’s automatic gain.
Yet certain auto insurance firms apparently find it fitting and rational to raise rates of drivers who are recently widowed.
A study of six of the nation’s larger auto insurers reportedly found that, for four of those companies, premiums for the bereaved averaged about 20 percent higher.
The Consumer Federation of America gathered rates for hypothetical drivers, females ages 30 and 50, in 10 cities, and compared the gap between premiums for married women and widows. Geico, Farmers, Progressive and Liberty assessed higher costs across the board to widows, according to a Columbus Dispatch article. Nationwide increased rates only in some cities. State Farm’s rates didn’t waver based on marital status, perhaps lending credence to its “like a good neighbor” self-promotional claims.
Pennsylvania’s Insurance Department took note of the disparity and issued a consumer alert, as noted Sunday in the Times Leader’s Consumer Watchdog column. The department also vowed to investigate seemingly spurious activities. “To protect drivers, the department established a policy calling for a review of insurance company rate filings that propose to charge a widow or widower a higher rate based solely on a change in marital status,” wrote columnist Joe Dolinsky.
An insurance industry trade group disputes the existence of an unfair “widow’s penalty.” It argues the rate differences are supported by actuarial findings that show married people tend to have fewer vehicle accidents and less-damaging ones.
The state’s Insurance Department emphasizes rates might change after the loss of a spouse for several legitimate reasons, including the poor driving record of the survivor or, after the payout of a life insurance policy, the absence of a multi-policy discount.
Last week, a Pittsburgh Post-Gazette editorial cited consumer advocates who suggest that a fair insurance system “would consider only a person’s accident record, speeding tickets and the number of miles driven.”
Beyond making good sense, such a method for evaluating drivers also could help the insurance industry improve its hard-hearted image. Penalizing a person potentially still in mourning – that’s just plain cold.