National consumer group calls on Ohio to stop widow's penalty | Betty Lin-Fisher

A national consumer rights advocacy group is calling on the state of Ohio and insurers to stop increasing insurance rates for some widows and widowers after the death of their spouse following a column I wrote earlier this summer.

In July, I wrote a column about Joe Kline of Suffield and his unwelcome surprise when his car insurance rate went up after the death of his wife.

Kline said it made no sense that the number of people insured for his two vehicles went down, but his insurance rate went up by $20 a half.

What is the widow's or widower's penalty?

The practice of raising a rate after a spouse’s death has been called the widow’s or widower’s penalty.

It is banned in at least one state.

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

“This so-called ‘widow’s penalty’ is completely unfair,” said the commissioner in a press release at the time. “Becoming a single driver because of the death of your spouse is not the same as being a young, inexperienced single driver. I will not approve any auto insurance rate filings that cannot provide actuarially sound data for including widows and widowers in a higher single rate category."

The ban later became a Delaware state law. I checked with several state and national industry sources this summer, but most had not heard of the ban.

In Ohio, there is no such ban, according to the Ohio Department of Insurance.

National group reaches out

After my column, I heard from the Consumer Federation of America, a Washington, D.C.-based consumer advocacy group.

The organization first studied what it called the unfair practice of insurers raising rates on widows and widowers in 2015. It found that several auto insurers increased rates for widows by an average of 20%.

In the 10 cities around the country studied in 2015, four of six major insurers – GEICO, Farmers, Progressive, and Liberty — increased rates on state-mandated liability coverage for widows by an average of 20%. 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.

Michael DeLong, research and advocacy associate for the Consumer Federation of America, said the organization has been advocating for states to eliminate the practice. There are two more states that have banned the practice, according to DeLong: Maryland and Massachusetts.

He also offered to do a mini study of some Ohio insurers to see how prevalent the practice was here. (An Ohio city was not among the original 10 studied in 2015).

Ohio study results

Here’s what they found:

The organization did three sets of online quotes for six major insurers, Geico, Liberty Mutual, American Family, Progressive, Nationwide and State Farm. They used the same driver profile and address of a 35 year old man or woman living in Akron with a perfect driving record. Nationwide and Liberty needed more information to complete the quote, so quotes were not received.

“Our evidence found that Progressive is charging women a 'widow's penalty,' raising their rates if they are widowed," DeLong said. "In our first test, we found that the six month premium for a 35 year old married woman was $187, but if she was widowed, her premium jumped to $204. And in the second test, the married woman's premium was $202, and the widowed woman's premium was $218.

"Progressive is charging women more for auto insurance after their husbands pass away, a perfect example of greed. It is both unfair and inhumane. What possible logic is there for this penalty on widows?"

Progressive did not respond to an inquiry seeking comment on the penalty. (9-23-22 update: Progressive responded a week after I reached out and after this column appeared. See the update at the end of this column).

For American Family, the results were inconclusive and quotes were different each of the three times. In some cases, widowed men or women were charged the same, more or less as someone married, so the organization said it can’t say for sure whether the insurer is charging the widow’s penalty.

The other companies either did not have results or did not appear to be charging the penalty, based on the mini study.

DeLong said the organization is calling on the Ohio Department of Insurance to help consumers.

"Several auto insurers charge women higher rates if they are widows, an egregious form of discrimination that penalizes people grieving for their spouse. The Ohio Department of Insurance should step in and ban these harmful actions by insurers,” he said.

In response to an inquiry, Ohio Department of Insurance Communications Director Sara Donlon said: “In regards to the Consumer Federation of America study, we are not familiar with the study, but we encourage anyone who may find themselves in this situation to contact us at 800-686-1526 or consumer.complaint@insurance.ohio.gov so we can look into the matter.”

Kline, the original subject of the column, also has been trying to reach out to lawmakers to try to effect some change.

“Thank you for keeping on it. I was surprised at how many people contacted me and were totally unaware there was such a thing,” Kline said of response he received after the column. Kline stayed with the same company after his agent looked around and got him a new rate to save money. He declined to name the insurer, though acknowledged it is one of the major ones from the 2015 study.

9-23-22 update:

I had reached out to Progressive on Monday of the week I was working on the column for comment. I did not hear from them by my Friday deadline.

However, I did hear back from Progressive spokesman Jeff Sibel a week later. He apologized for the delay and said he already knew my column had run. He asked if he could provide some clarification:

“Our loss experience shows the single rating is actuarially more appropriate for Widow(er)s than would be a married rating,” Sibel wrote. “For Progressive customers who’s spouse has died while actively insured with us, we continue to rate the driver in the same married classification they had before their loss.  This applies for the balance of that term and all subsequent policy terms.  While we continue to rate the widowed driver as ‘married’ there may be factors (such as the number of drivers, vehicles, and complexion of the household) that impact rate when a policy is up for renewal.”

In a follow-up email, Sibel confirmed for me that a new customer who is a widow or widower would be rated as a single and not married.

Michael DeLong, research and advocacy associate for the Consumer Federation of America, said the group still considers the new customer who is a widow or widow being rated as a single to be the widow’s penalty.

“The insurance company treats widows differently than people whose spouse hasn’t yet died. The fact that they have an exception for existing customers doesn’t mean they are not mistreating widows, just that they are mistreating slightly fewer of them,” said DeLong, who called on the Ohio Department of Insurance in last week’s column to stop the practice also sent a letter to the commissioner after the column ran.

“The company is basically saying, we’ll keep you if you had been with us before, but otherwise widows need not apply.  Even if it’s just a small penalty, there is no reason the Department should allow insurance companies to charge widowed drivers more than married drivers for coverage the Ohio requires under law,” said DeLong.

Beacon Journal staff reporter Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ. To see her most recent stories and columns, go to www.tinyurl.com/bettylinfisher.

This article originally appeared on Akron Beacon Journal: National consumer group calls widow's penalty unfair in Ohio