New Law Protects Widows and Widowers from Insurance Rate Hikes
Texas Governor Greg Abbott has signed a bill that prevents insurance companies from raising auto and home insurance rates for people whose spouses have passed away. This law, which will take effect on September 1, aims to end the so-called "widow penalty."
What is the Widow Penalty?
The widow penalty refers to the practice of insurance companies raising rates for widows and widowers after their spouses have died. A 2015 study found that four out of six major auto insurance providers would reclassify widows and widowers from "married" to "single" after their spouses died, resulting in an average rate increase of 20%.
Personal Stories of the Widow Penalty
Evelyn Delgado, a resident of New Braunfels, experienced the widow penalty firsthand. After her husband passed away, she notified her insurer to remove him from her policy. However, she was shocked to learn that her rate would increase, not decrease. The insurer explained that since she was no longer classified as married, but rather as single, her rate would go up.
The Impact of the Widow Penalty
Delgado was fortunate to be able to afford the extra $280 per year her insurer was charging her. However, many widows and widowers are not as fortunate, relying on fixed incomes and Social Security checks to make ends meet. Ann Baddour, director of the Fair Financial Services Project at Texas Appleseed, notes that it’s difficult to estimate the number of Texans affected by the widow penalty, but over 1.1 million widows in Texas could potentially be impacted.
How the New Law Will Help
The new law, which was primarily the work of state Senators Lois Kolkhorst and Mayes Middleton, will prevent insurance companies from raising rates based on marital status. Baddour encourages anyone who thinks they may have been hurt by the widow penalty to contact their insurer as soon as possible after the new law goes into effect. By ensuring that they are categorized as married for rating purposes, individuals may be able to lower their premiums.
Conclusion
The new law protecting widows and widowers from insurance rate hikes is a significant step forward in ensuring fairness and equality in insurance pricing. By preventing insurance companies from raising rates based on marital status, the law will help to alleviate financial burdens on those who are already vulnerable. As the law goes into effect on September 1, individuals are encouraged to review their policies and contact their insurers to ensure they are receiving the lowest possible rates.
