‘Widow’s penalty’ increases car insurance after death – InsuranceNewsNet | Business Insurance

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joe klin of Suffield got an unpleasant surprise when he called his insurance agent after his wife of 52 years, Angie, died in April of pulmonary fibrosis.

Kline wanted to continue insuring two vehicles, but assumed his insurance rate would drop with one less driver.

Instead, it went up around $20 in half

“That’s when my hair stood on end,” Kline said. “I didn’t think she would be cut in half, but she shouldn’t have gone up.”

That didn’t make sense, Kline said, since he was now half the insurance company’s liability. Kline said he knows it’s not a lot of money, but it was the beginning that bothered him. He lost his discount for multiple drivers.

“So I guess they’re assuming that if you no longer have your spouse in the passenger seat yelling at you to stop tailgating or slow down, that makes you a bad driver, right?” he said.

Kline drove a truck for a living and never had an accident in 35 years. If he was a good driver the day before his wife died, why is he a bad driver the day after she died? he said.

'Widow's penalty' increases car insurance after death – InsuranceNewsNet | Business Insurance Allianz 728x90 2022 07

“Just give me a good valid reason and I’ll be happy to pay,” Kline said.

At least one state agrees with Kline.

Delaware prohibits what its former insurance commissioner called the “widowhood penalty,” where a widow or widower was charged more after the death of a spouse.

In 2015, the then Delaware Insurance Commissioner Karen Weldin Stewart announced that it would not approve any auto insurance rate filing that included the penalty.

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“This so-called ‘widowhood penalty’ is completely unfair,” the commissioner said in a press release at the time. “Becoming a single driver due to the death of your spouse is not the same as being a young, inexperienced single driver. I will not approve any auto insurance rate filing that cannot provide actuarially sound data to include widows and widowers in a highest category single rate.

“Car insurance companies are allowed to charge inexperienced drivers, such as teenagers, a high premium because some actuarial studies show that young single drivers file more claims than young married drivers. However, the Delaware Department of Insurance is not aware of any data showing that single older drivers exhibit the same behavior compared to married older drivers,” the commissioner said.

The commissioner also went on to say that her department recognized that marital status was not the only reason premiums can change after the loss of a spouse. Companies may offer multi-policy discounts for other products, or the married couple may have been 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 their spouse, the premium may decrease. However, the reverse is also true,” he said. .

The ban later became a Delaware state law when the current Delaware Insurance Commissioner Trinidad Navarro worked with lawmakers, a spokeswoman for Navarro’s office told me in an email.

I checked with various state and national industry sources, and it’s unclear if other states ban the practice as Delaware. Most sources had not heard of the ban.

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In Ohiothere is no such prohibition, according to the Ohio Department of Insurance.

Spokesman Robert Denhard He said every situation is different and encouraged consumers with questions about his policies or any issues to contact the state agency.

“Every insurance situation is unique with different factors involved, especially in this situation where a policy is re-qualified, not penalized, based on two people’s different risk exposures for now just one person’s information.” Denhard said.

Consumers can call 800-686-1526 or email [email protected] with problems

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Various industry sources, including Scott Holemandirector of media relations New York-established Insurance Information Institutehe said he hadn’t heard of the “widow’s penalty” but recommended that spouses shop around after a death to find more competitive rates.

“Because insurance is a highly competitive industry, Triple-I recommends consumers routinely check rates with at least three companies to see if they qualify for savings. In other words, we always recommend shopping around,” Holeman said. “In addition, consumers should maintain an annual checklist to discuss any questions they have with their insurance professional on an annual basis, as needs change, especially during various changes in the life”.

Robert Passmoredepartmental vice president of American Property Casualty Insurance AssociationHe also recommended calling your insurance company to find out exactly why a rate increase occurred or shop around when you see a rate increase.

“Insurance ratings are subject to rigorous actuarial standards and state regulations, ensuring that all rating factors accurately reflect the risk of loss,” he said.

But Passmore said auto insurers “have collected data for decades and over the years have found that factors such as marital status have proven to be an accurate variable in predicting the likelihood and severity of insurance claims.” .

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Passmore suggested looking into new products like “usage-based insurance, especially if you’re driving less, plus take steps to avoid accidents, like distracted driving.”

Kline ended up staying with the same insurance company, but her agent found another program to slightly lower her premium. Kline still believes the practice is unfair, but he said he was otherwise happy the company stayed. However, he would not have found the cheapest premium if he hadn’t backtracked and encourages other widows and widowers to look for possible savings.

Kline still says that the “widowhood penalty” or changes when a person is removed from a policy is meaningless.

“What is the difference between a death and a divorce? This is something that affects a lot of people.”

Betty Lin Fisher you can call 330-996-3724 or [email protected]. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ. To see his most recent stories and columns, go to www.tinyurl.com/bettylinfisher

Betty Lin Fisher

consumer columnist

Akron Beacon Journal

USA TODAY’S NETWORK – OHIO