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Let’s stop the widow penalty by insurance companies

October 15, 2018 by Steven M. Gursten

Under the widow penalty, insurance companies charge women as much as 200% more; HB 5111 will stop women from being discriminated against by auto insurers

Widow Penalty - Rep. Lana Theis won't hear HB 5111
WXYZ’s Kim Russell asks Rep. Lana Theis (R-Brighton) – who chairs the House Insurance Committee – about the widow penalty and whether Rep. Theis thinks it’s acceptable for Michigan auto insurance companies to discriminate against widows and women.

The widow penalty is one of the cruelest and most shameful things I’ve seen Michigan’s insurance companies do – and after 25 years as an auto accident lawyer, trust me when I say I’ve seen a lot.

The widow penalty is where car insurance companies charge significantly higher premiums to women who have lost their husbands.

That’s it.

No changes to their driving records.  These women haven’t been involved in car accidents or received speeding tickets.  They have seen a huge jump in their car insurance premiums because they have lost a husband.

It is shameful and it is illegal.

And it’s long-overdue for elimination by Michigan lawmakers.

Why are insurance companies treating women worse than men?

As a lawyer, I became aware of this first-hand when a wonderful legal assistant in our office tragically lost her husband.  I spoke with WXYZ investigative reporter Kim Russell about it, and now, thanks to the excellent reporting by Kim Russell, the rest of this state is aware of this, too.

Ms. Russell reported that widows she spoke with saw their car insurance costs increase as much as 200% after their husbands passed away, even though they were insuring fewer vehicles.  These women were calling their insurance companies after they had lost their husbands to report that they had passed and to drop insurance on the car that their husbands would no longer drive – and they were seeing car insurance premiums being increased instead of being reduced, even though there was one less driver on the policy and one less car on the road!

When Ms. Russell interviewed me on this issue, I told her that under no uncertain terms this was gender discrimination and it was flat-out against the law:

“It is not legal … There is a law right on point that says women cannot be charged more than men, nor should they by the way, because statistically women are safer drivers.”

Gender discrimination – which includes this cruel penalty for widows – has long been illegal under the Insurance Code.

But for those auto insurers for whom the prohibition hasn’t sunk in, House lawmakers are pushing House Bill 5111, which would explicitly, specifically and emphatically prohibit price-setting injustices like the widow penalty.

I’m not holding out much hope that this bill passes when we have politicians – like Rep. Lana Theis (R-Brighton) who chairs the powerful House Insurance Committee – that seem hellbent on only doing whatever the insurance companies want her to do.

But at least this news reporting has brought awareness of gender discrimination against women by the auto insurers.

House Bill 5111 and eliminating the widow penalty

House Bill 5111, which was introduced in October 2017, by Rep. Sherry Gay-Dagnogo (D-Detroit) – and supported by 30 co-sponsors – would eliminate the widow penalty with the following proposed change in the law:

“An insurer shall not use … sex … [and/or] marital status … [as a factor] in underwriting or establishing rates for automobile insurance …”

The first step on the road to passage is getting a hearing before the House Insurance Committee, whose chair is Rep. Lana Theis (R-Brighton).

But, according to Ms. Russell, in her September 24, 2018, story, “State House insurance Committee chair confronted over women paying more for insurance than men,” Rep. Theis “who is running for State Senate, has refused to put it before her committee.”

When asked by WXYZ’s Ms. Russell about gender discrimination in auto insurance pricing, the widow penalty and HB 5111, Rep. Theis declined to be interviewed.

Initially, her chief of staff provided a statement to WXYZ, even though, in Ms. Russell’s assessment, it “did not explain why [Rep. Theis] is not using legislation to stop gender discrimination and discrimination based on marital status, which the state’s insurance commissioner’s office says lawmakers could easily do.”

Later, when confronted face-to-face by Ms. Russell about what she would “do to stop discrimination” such as the widow penalty, Rep. Theis refused to confront the issue of women being discriminated against and paying more for auto insurance than men.

When asked by Ms. Russell if she thought it was acceptable for insurers to discriminate against widows and women if the “overall” cost of auto insurance were reduced, Rep. Theis said this:

“So you’re more concerned that one party of any kind be charged more of the astronomically high cost than reducing everybody’s costs by 40%?”

Why Rep. Lana Theis doesn’t want to protect women from insurance companies

Helpfully, the news story also shed some light on Rep. Theis’ bizarre answer to the question.

It’s because the insurance companies don’t want her to do anything about widows and women being charged more for auto insurance.  As Kim Russell said: “campaign finance records show why [Rep. Theis] doesn’t want to regulate insurance companies”:

“Theis has received thousands of dollars from insurance companies.  Plus, a fund started by her husband received at least $80,000 from insurance companies.”

The financial hardship of the widow penalty

WXYZ’s Ms. Russell reveals in her reporting on the widow penalty the dollars and cents reality of what Michigan auto insurers are subjecting widows to.

In her first broadcast on this issue, “Michigan allows higher car insurance prices for women,” Ms. Russell told the story of Melinda McKee (a valued member of the Michigan Auto Law team) for whom the “widow penalty” imposed by her auto insurer, AAA, resulted in a 200% per-vehicle increase in premiums. Mel went from paying $200 per month for two cars to $300 per month for one car.

In Ms. Russell’s follow-up investigation, she reported that the widow penalty imposed by Auto-Owners Insurance Company caused widow Leslie Ashley’s overall car insurance costs to increase 150% after her husband’s death, even though she, like Mel, was no longer insuring as many vehicles.

Notably, in its 2015 study about how “most major auto insurers vary prices considerably depending on marital status,” the Consumer Federation of America found that auto insurers charge “higher rates for widows than for married women”:

“In the ten cities studied, four of six major insurers – GEICO, Farmers, Progressive, and Liberty — increased rates on state-mandated liability coverage for widows by an average of 20 percent. The fifth insurer, Nationwide, sometimes increased rates for widows.”

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