The “widow’s penalty,” wherein a widow or widower is charged a higher rate for auto insurance based exclusively on the change in his or her marital status after the loss of a spouse, is no longer allowed by the Delaware Department of Insurance. Moving forward, rate submissions by auto insurance companies that include the surcharge will not be approved, the Department said.
“This so-called ‘widow’s penalty’ is completely unfair,” said Karen Weldin Stewart, commissioner of the Department of Insurance.
“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.”
Stewart’s statement compares the circumstances between widow/widowed drivers and inexperienced teenage motorists; the latter can be charged higher premiums by automobile insurers as actuarial studies suggest that young and single drivers file more claims than married drivers. Stewart made clear that the department is not aware of any data that suggests that older single drivers exhibit the same behavior when compared to older married drivers.
A change in marital status is not the only reason auto insurance premiums can suddenly change for a widowed driver, the department said.
The department said companies that offer multi-policy discounts for having both life and auto policies could discontinue the discount if the life insurance policy terminates upon the death of a spouse.
Some companies consider the combined driving records of a couple when determining a premium on an auto policy. Should one spouse pass away, the premium could change to reflect the risk of the surviving partner alone. If that driver has a better driving record than the deceased partner, the premium may go down. The reverse, however, may also apply, the department noted.
The new and revised policy is effective immediately and is directed to all insurers writing auto insurance coverage in Delaware. The policy, contained in Auto Bulletin No. 23, only applies to rate reviews after the policy was enacted.
