Commissioner Stewart Outlaws “Widow’s Penalty” In Setting Auto Insurance Rates

Says Practice Is Not Supported By Facts

 

DOVER, DE – Insurance Commissioner Karen Weldin Stewart announced today that she will not approve any auto insurance company’s rate submission that includes a “widow’s penalty,” under which a widow or widower is charged a higher rate based solely on the change in his or her marital status following the loss of a spouse.

 

“This so-called ‘widow’s penalty’ is completely unfair,” said the Commissioner. “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.”

 

Automobile insurance companies are permitted to charge inexperienced drivers, such as teenagers, a high premium because some actuarial studies show that young single drivers file more claims than young married drivers. However, the Delaware Insurance Department is not aware of any such data showing that older single drivers exhibit the same behavior when compared to older married drivers.

 

The Insurance Department recognizes that marital status is not the only reason why auto insurance premiums can change following the loss of a spouse. For instance, many companies offer multi-policy discounts for having both life and auto policies with that company.  If one of those policies ends, such as a life insurance policy after a spouse dies, that discount may be cancelled. Also, a married couple on a policy might have their driving records considered together when determining the premium.  When one spouse dies, the premium will change to reflect the risk of the remaining driver.  If that driver has a better driving record than his or her spouse, the premium may go down. However, the reverse is also true.

 

The new policy, contained in Auto Bulletin No. 23, is effective immediately and is directed to all insurers writing automobile insurance coverage in Delaware. Commissioner Stewart reminds consumers that the policy only applies to rate reviews going forward, so current policyholders should shop around and get quotes from other insurance companies if their auto premium has recently increased.

 

The full text of Auto Bulletin 23 may be found at http://www.delawareinsurance.gov/departments/documents/bulletins/autobull23.pdf

 

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Delaware Department of Insurance |www.delawareinsurance.gov | 302-674-7300

Media Contact:  Jerry Grant  (302) 674-7303

Dover, DE–Insurance Commissioner Karen Weldin Stewart is alerting drivers in Delaware that as of June 25, 2014, Delaware law-enforcement officials will accept proof of auto insurance (insurance ID card) in physical or electronic format. House Bill 258 w/HA 1 states that law-enforcement will now accept electronic proof of insurance on “a cellular phone or any type of portable electronic device.” While this bill will make it easier for drivers in Delaware to prove that they have the proper insurance coverage, Commissioner Stewart recommends that drivers continue to keep a current physical copy of their insurance ID card in their vehicle at all times.

Commissioner Stewart noted, “I applaud the Delaware legislature and Governor Markell for passing and enacting this legislation that will now allow for electronic proof of auto insurance. Delaware is now the 37th state to allow this proof of insurance coverage. However, I suggest that all drivers still keep a physical copy of their current insurance ID card in their vehicle in case your cell phone [or other portable electronic device] has a dead battery or can’t get a signal when you need to show your proof of coverage. Additionally, not all of the states in the region accept electronic proof of auto insurance, including New Jersey, New York and West Virginia. You don’t want to be caught without the proper proof of insurance when traveling.”

If your insurance company offers an app for your smartphone or tablet it is probably helpful to download the app. An app can usually make accessing your insurance ID card much easier than logging in to a website which may or may not be ‘mobile-friendly’. Apps often don’t require you to log-in, whereas a website will usually require you to enter your username and password which you might forget if you don’t access that site often. Ultimately, consumers should do what works best for them.

Two additional items in the bill (HB 258) should also be noted: First, the bill states that “Presentation of proof of insurance in electronic format shall not constitute consent for law enforcement, justice of the peace, or other state officials to access other contents of the cellular phone or other portable electronic device, and shall not expand or restrict authority to conduct a search or investigation.”

Additionally, the bill states, “Law enforcement officers, justice of the peace, and other state officials shall not be liable for any damage to a cellular phone or portable electronic device resulting from its use to present satisfactory proof of motor vehicle liability insurance coverage.” Commissioner Stewart added, “I’m very pleased that the state legislature inserted language in to this bill to protect the privacy of consumers.”

To read the complete bill visit: http://www.legis.delaware.gov/, click on “Bill Tracking” and select “House Bill” and enter “258” in to the search field. HB 258 was passed by the Delaware State Legislature on May 15, 2014 and signed in to law by Governor Jack Markell on June 25, 2014.

For more information about automobile insurance visit www.delawareinsurance.gov or call the Delaware Department of Insurance Consumer Services Division at 1-800-282-8611.

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Delaware Department of Insurance: “Protecting Delawareans through regulation and education while providing oversight of the insurance industry to best serve the public.”