Single, Divorced Or Widowed? New Study Says Auto Insurers Are Ripping You Off

Alex Lloyd
·Editor at Large

Auto insurance rates vary wildly based on factors like the driver’s sex and age, how many accidents they’ve had, the type of car being insured, where that car is located, and so on. The list is so long, in fact, there are perhaps elements that remain a mystery even to some of the employees that enforce them. But one factor has emerged in a recent study that is being labeled “unfair,” and the Consumer Federation of America is seeking action.

The CFA researched how marital status impacted pricing by most of the major insurers, and found that four of the six insurance companies studied increased premiums for women whose husbands had died by an average of 20 percent. Geico peaked the table at 29 percent, while the two that varied the least were Nationwide at 3 percent and State Farm that did not vary its rates at all based on marital status.

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The study states premium increases stem further than just widowed females. “At most major companies, rates are almost always higher for single, separated and divorced drivers than for married drivers,” the study continued, with the figures in the graph above mostly replicating the increases found for all single, divorced and separated individuals — regardless of sex — as well as for the widowed (with the exception of Geico, who’s numbers varied “unpredictably” between each class of marital status). 

Farmers, with an increase of 22 percent, showed the largest average hike in price for those individuals not married. 

The six insurers involved in the study were Geico, Farmers, Progressive, Nationwide, Liberty Mutual and State Farm. Due to a website redesign that made comparisons difficult, Allstate was not included. The testing was conducted in 10 cities ranging from Minneapolis to Tampa to Oregon, and across various driver age groups.

While the study said age appeared to matter little with regards to marital status, where you live does: In Louisville, for example, Geico’s quoted premium in the study was $650 per year for a married individual, but if that exact person was widowed, the rate would jump to $1,302 — and up to $1,864 for someone that was separated. While State Farm did not vary its rates at all based on marital status, the total premium in Louisville remained high at $1,248.

By contrast, Oakland, Calif. varied the least of the cities tested, with Geico quoting $388 annually for a married individual and $478 for those single, separated or divorced. In this case, there was no premium imposed by Geico for a widower (Progressive and Farmers did, with the latter slapping a $530 hike in price). In general, though, Oakland varied less because California law mandates insurers give precedence to aspects such as driving record, miles driven and years of experience, stating factors such as marital status cannot impact premiums as greatly.

But why is marital status affecting insurance premiums at all?

The CFA says data used to determine pricing differences between single and married couples derive from an injury study released in 2004 by a group in New Zealand. Only 138 subjects were used during the research (which was conducted circa 1990), with a “substantial minority” of those accidents involving motorcycles. Even still, the CFA says the difference in injury rate “was only one percentage point” between married and single individuals.

The theory says that married individuals will be more responsible and cautious behind the wheel. Loretta Worters, vice president of communications for the Insurance Information Institute, told Bloomberg that a married person’s increased risk aversion is evident in their driving record, noting fewer accidents and tickets.

The CFA contends that there is insignificant data to support this claim, and that this is merely “further evidence that insurers are using factors related simply to profitability, such as ‘how much the traffic will bear,’ in their pricing.” Stephen Brobeck, CFA’s Executive Director, went on to say “hiking rates on women whose husbands die seems both unfair and inhumane.”

All major insurers contacted for this article declined to comment, however James Lynch, the Insurance Information Institute's chief actuary, told Yahoo Autos that he was surprised the CFA was only now bringing this up, stating insurers have been doing this for some time: "The insurers rely on their own internal data," Lynch said, "they do not rely on a 2004 study. The discount for married couples has existed for decades, and it's a little surprising that at this late date the Consumer Federation of America takes the opportunity to say there's something wrong with this."

It’s not just marital statuses the CFA has bucketed into this “unfair” bracket. The organization says that the use of credit scores and education discriminates against lower-income drivers (as does marital status). And while the Insurance Information Institute contests that valuable data derives from these factors, allowing insurers to offer more accurate pricing for their customers, the CFA is calling for state regulators to take a closer look to determine if these elements are indeed appropriate, or whether they purely remain methods to justify higher premiums.