As far as words that feel wrong together, “widow’s penalty” has got to be up there among the most brutal.
Isn’t losing a husband or wife bad enough on its own?
Apparently not. The state insurance department, with backing from the office of Gov. Tom Wolf, recently warned consumers of the widow’s penalty, an all too real instance where individuals see a hike in their auto insurance premium after the loss of a spouse.
As far as auto insurance companies are concerned, it isn’t much different than charging a higher rate to a recently-licensed teenager or a driver with a history of tickets, fines or wrecks. The cost differences exist because there is statistical evidence to support a risk disparity between the two groups, the department warns.
Some of that evidence, believe it or not, points to risk associated with single drivers, with widows and widowers classified in that group. Following the loss of a spouse, some auto insurance companies can raise their auto premium. No, for real.
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.
“If the insurance company cannot provide statistical support for including widows and widowers in the higher single rate, we will not approve the rate change and will require the insurer to continue to use the lower rate,” according to a statement from the department.
If affected, officials from the department advise three things:
• If grandfathered in to outdated policies that use the rating factor, drivers are encouraged to shop elsewhere for their auto insurance. A cheaper, more compassionate plan may be out there.
• When a couple is on a policy, driving records are considered one when determining the premium. If one spouse dies, the premium will change to reflect the risk of the driver remaining on the policy. If that driver has a better driving record than their spouse, the premium may go down, but 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 discounts for families combining multiple types of policies, such as a life and auto policy. If one of those policies goes away, like a life policy paid out after the loss of a spouse, that discount may go away as well. Again, it doesn’t hurt to shop around for a new plan.
• When in doubt, call your insurance company if you have questions about why your auto premium is changing.
If you have questions about whether your insurance company is complying with Pennsylvania law and regulation, contact the insurance department at 1-888-881-6388.