The Consumer Federation of America (CFA) determined that the principal auto insurers, with the exception of State Farm, almost invariably charge single, divorced, and widowed women higher rates than married women. Marital status is used as a determining factor for premium rates by GEICO, Farmers, Progressive, and to a lesser degree, Nationwide and Liberty.
While not illegal, CFA’s executive director Stephen Brobeck does feel it is unfair to use marital status to calculate premium rates. He urges insurance providers to look at such factors as accidents, moving violations, and number of miles driven when quoting rates.
In the ten cities studied, the discrepancy in rates between married women and widows ranged from 3 percent with Nationwide, to 29 percent with GEICO.
The principle exception was State Farm. According to CFA, rate quotes were the same in all ten cities for single, married, separated, and divorced women, widows, and women living with a domestic partner.
The study collected rate quotes for a 30-year-old female with no accidents or moving violations, possessing a high school diploma, and driving a 2005 Honda Civic in the following cities:
· Baltimore, MD
· Chicago, IL
· Denver, CO
· Houston, TX
· Louisville, LA
· Minneapolis, MN
· Oakland, CA
· Phoenix, AZ
· Portland, OR
· Tampa, FL
CFA also examined the rates for a 50-year-old woman with an otherwise identical profile. Single women of this age were charged anywhere from 6 percent more to 134 percent more than married women, with rates varying widely among companies and cities.
The insurance industry, however, defends its rates. Chief actuary of the Insurance Information Institute, James Lynch, states that marital status has been used as a factor for calculating insurance premiums for at least 40 years. Furthermore, he states that differential rates, benefitting some customers and penalizing others, have existed since the 1920s.
Lynch goes on to say that insurance companies establish premiums based on a customer’s tendency to have a loss. Therefore, those individuals who are more likely to cause the insurance company to suffer a loss, will be charged more. According to Lynch, married people are less likely to have a loss than single people.
Widows, unfortunately, fall into the high-risk category as well. Although he could not personally explain this phenomenon, Lynch says the data exists to support the insurance industry’s stance. Anytime the insurance companies charge more, they must justify it to state insurance regulators with statistical facts.
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