Increase in car insurance payments catches recently widowed consumer off guard
February 22, 2016 12:00 AM
Robert Balas, 81, of Butler, thought he was doing the right thing last year when his wife passed away. He called his auto insurance company, believing his rate would go down because there was only one driver on the policy. He was shocked to discover the company actually raised his rate for coverage.
By Tim Grant / Pittsburgh Post-Gazette
After his wife of nearly 47 years passed away in March 2015, Robert Balas thought he was doing the right thing when he called his automobile insurance carrier to let them know.
The 81-year-old Butler resident thought his insurance payments would drop since there would only be one driver on the policy.
Instead, he was unpleasantly surprised when his annual AAA insurance bill almost immediately jumped — from $1,166 to $1,258.
“I called the company to find out why they jacked up my car insurance rate, and the lady I talked to said, ‘Now that you’re a widower, you might go out bar-hopping and partying.’ I told her I’m 81 years old and I’m not about to go chasing women and living wild.”
Mr. Balas purchased the policy through Santa Ana, Calif.-based Interinsurance Exchange of the Automobile Club. Company representatives did not respond to interview requests.
In September, Pennsylvania Insurance commissioner Teresa Miller issued a statement announcing she would not approve auto insurance rate filings that contain the so-called ”widow’s penalty,” under which a widow or widower is charged a higher rate solely based on the change in his or her marital status.
“Gov. [Tom] Wolf and I remain committed to protecting consumers in Pennsylvania,” Ms. Miller said at that time. ”Raising auto premiums in this situation is unfair, and if the insurer cannot provide statistical support for including widows and widowers in the higher single rate category, I will not approve the rate change, and require the insurer to continue to use the lower rate.”
Ms. Miller stated that her policy only applied to rate reviews going forward, and not to any previously approved filing that uses this type of rate calculation. Some companies have used a rating based on marital status.
But she encouraged consumers experiencing this type of rate increase to consider switching insurance carriers.
A spokesman for the Pennsylvania Insurance Department couldn’t specifically address Mr. Balas’ case, but he suggested that the widower and others in the state who have experienced such problems contact the state Consumer Services Bureau in Harrisburg. Investigators can look into exactly why their auto rates were increased.
“Without more knowledge, I can’t say why his rate was raised,” Ron Ruman said. ”I don’t know the circumstances. His wife could have had a spotless driving record and he had three accidents. There are circumstances where a company can say an individual represents a greater risk than the couple did.
“If [the insurance company] can show statistical evidence the survivor is a greater risk, the rate can go up,” he said. “But if they raised his rate purely based on him being a widower, it would be inconsistent with this state’s policy.”
Mr. Balas said his car, truck, residence and vacation home have been covered under the AAA policy for at least 10 years. Neither he nor his wife has ever filed an auto accident claim with AAA, he said.
He said he worked for General Motors’ Oldsmobile division for 32 years as a district service manager visiting dealerships from West Virginia to Lock Haven, Clinton County and in all those years never had an accident.
“I tried to explain to these people that I never had no problems,” he said. ”I never had any accidents. I shouldn’t have even bothered to tell them she died. The policy would have stayed the same. But I was doing the right thing.”
The Washington, D.C.-based Consumer Federation of America found in an August 2015 study that most major auto insurers vary their prices depending on marital status, and when a husband dies, the surviving widow usually sees a rate hike.
In the 10 cities studied, four of six major insurers — Geico, Farmers, Progressive and Liberty — raised rates on state-mandated liability coverage for widows by an average of 20 percent. The fifth insurer, Nationwide, sometimes raised rates for widowers. The sixth insurer, State Farm did not vary the rates it charged because of marital status.
The study did not compare similar rate increases for men who lost a spouse or single men in general.
To contact the state Consumer Services Bureau in Harrisburg with questions about rate hikes, call 1-877-881-6388.
Tim Grant: firstname.lastname@example.org or 412-263-1591.
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