CFA Asks State Insurance Departments to Examine Marital Pricing and Remedy Any Unfairness
Washington, D.C. — Today, the Consumer Federation of America (CFA) released research on how insurers utilize marital status in their pricing of auto insurance policies. CFA questions the fairness and relation to risk of this pricing by most major insurers, particularly their practice of hiking rates on women whose husbands die. In the ten cities studied, four of six major insurers – GEICO, Farmers, Progressive, and Liberty — increased rates on state-mandated liability coverage for widows by an average of 20 percent. The fifth insurer, Nationwide, sometimes increased rates for widows. The sixth insurer, State Farm, did not vary the rates it charged because of marital status. All State Farm price quotes for a driver in a city were the same, regardless of whether the driver was single, separated, divorced, widowed, a domestic partner, or married.
Table 1: Average and Range of Percentage Increases in Annual Premiums in Ten Cities When a Young Woman is Widowed
| Average | Range | |
| State Farm | 0% | 0-0% |
| GEICO | 29 | 0-226 |
| Farmers | 22 | 0-34 |
| Progressive | 19 | 12-25 |
| Nationwide | 3 | 0-14 |
| Liberty | 8 | 4-12 |
| Total | 14% | 0-226% |
“Hiking rates on women whose husbands die seems both unfair and inhumane,” said Stephen Brobeck, CFA’s Executive Director. “Why don’t insurers instead emphasize driving-related factors such as accidents, traffic violations, and miles driven in their pricing?” he asked. An earlier national survey of a representative sample of adult Americans, commissioned by CFA, found overwhelming consumer support for insurer emphasis on these driving-related factors in their auto insurance pricing.
The CFA research, undertaken by Brobeck and Michelle Styczynski, utilized quotes from the websites of the auto insurers for the minimum liability insurance required by states. For each quote in the ten cities, all car, driver, and insurance characteristics were held constant except for marital status. These characteristics are listed at the end of the news release.
At Most Major Companies, Rates Are Almost Always Higher for Single, Separated, and Divorced Drivers Than For Married Drivers
Farmers, Progressive, Nationwide, and Liberty always charged single, separated, and divorced drivers the same price, and this annual premium was almost always higher than the premium it charged married persons. GEICO’s premium quotes, though always lower for married drivers, varied unpredictably, with single, separated, and divorced drivers often being charged different prices.
Table 2: Average and Range of Percentage Increases in Annual Premiums from Married Status to Single/Separated/Divorced Status at Four Major Insurers
| Average | Range | |
| Farmers | 22% | 0-34% |
| Progressive | 19 | 12-25 |
| Nationwide | 9 | 3-14 |
| Liberty | 8 | 4-12 |
These price differences appear to exist at all age levels. Most prices collected by CFA were for a 30-year old, safe, female driver. When her age was increased to 50, the price differences persisted. “One would like to see any evidence that two 50-year olds with the same characteristics pose considerably different insurer risks because of their marital status,” noted CFA’s Brobeck.
Table 3: Percentage Increases in Annual Premiums from Married Status to Single Status in Three Sample Cities When the Driver is 50 Years of Age
| Louisville | Chicago | Houston | |
| GEICO | 134% | 8% | 16% |
| Farmers | 28 | 20 | 24 |
| Progressive | 12 | 7 | 6 |
Auto insurers say that married people deserve lower rates than others because they tend to drive more responsibly. They, and their advocates, frequently cite a study released in 2004 by the National Institutes of Health showing that single persons had higher driving injury rates than married persons (G. Whitlock, et al, “Motor Vehicle Injury and Marital Status,” Injury Prevention, 10: 33-36). However, this study, undertaken by several academics, was based on data collected in New Zealand around 1990 involving only 138 injuries, a substantial minority of which involved driving motorcycles. And the difference in injury rates was only about one percentage point.
“It is significant that single, separated, and divorced persons tend to have lower incomes than those who are married,” noted CFA’s Brobeck. Insurer use of marital status in their pricing – along with their use of other non-driving factors researched earlier by CFA, including education, occupation, and credit scores – tends to discriminate against low- and moderate-income Americans.
This new research on marital status further supports CFA’s hypothesis that major insurers are not that interested in providing minimum liability coverage, most often purchased by lower income drivers, because dollar profits are so much higher on policies sold drivers who also purchase collision and comprehensive coverage, often on several cars, as well as homeowner insurance. “The lack of insurer interest in selling competitively-priced auto insurance to lower-income drivers exacts a social high price,” noted J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner. “Most lower-income drivers need a car to meet transportation needs, yet cannot drive legally without purchasing the liability insurance required by all states except New Hampshire,” he added.
Insurer Treatment of Domestic Partners Varies Greatly
The research revealed no evidence that State Farm, Farmers, Nationwide, and Liberty charge higher premiums to domestic partners than to the married. However, both Geico and Progressive often charge domestic partners higher rates than the married. That was the case, for Geico, in Baltimore, Tampa, Louisville, Minneapolis, Denver, and Phoenix. And it was the case, for Progressive, in Baltimore, Tampa, Louisville, Minneapolis, Houston, Denver, and Phoenix. Maryland and Colorado, along with California and Oregon, offer domestic partnership status.
It is also worth noting that the smallest price differences between single and married premiums, among the ten cities, were in Oakland. California law requires auto insurers to treat driving record, miles driven, and years experience as “mandatory” and “primary” factors in rate-setting. Others factors, including marital status, are considered “optional” and cannot have as great an impact on rates.
CFA Calls on State Insurance Departments to Investigate Insurer Use of Marital Status in Auto Insurance Pricing
“The ‘widow penalty’ and other pricing related to marital status provides still another reason for state insurance departments to examine insurer pricing more carefully,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner. “Auto insurers are increasingly using non-driving factors in this pricing, and it appears that much of this pricing is unrelated to insurer risk,” he added.
“Insurer use of ‘price optimization,’ which a number of insurance departments have recently prohibited, provides further evidence that insurers are using factors related simply to profitability, such as ‘how much the traffic will bear,’ in their pricing,” Hunter noted. “The result is that not only does insurance pricing become increasing exploitative, but also that lower income and minority drivers are charged the highest prices simply because of their socio-economic characteristics,” he added.
CFA will be sharing the findings of this latest research with all state insurance departments and with the Federal Insurance Office, which is considering the issue of insurance affordability.
The prices in the table below are based on a driver with the following characteristics:
Female 30 years old
Driving since 16
No accidents or moving violations
High school degree
Bank teller
Renter in ZIP code with $30,000 median household income
Drives a 2005 Honda Civic which owns
Has insurance most recently purchased 3 years ago
Contact: Michelle Styczynski, 202-387-6121; J. Robert Hunter, 703-731-6353
CFA is a nonprofit association of more than 250 consumer groups that was established in 1968 to advance the consumer interest through research, advocacy, and education.
Appendix: Quoted Annual Premiums from Major Auto Insurers Related to Marital Status
| Baltimore, MD | State Farm | GEICO | Farmers | Progressive | Nationwide | Liberty |
| Single | $2274 | $1292 | $3010 | $2098 | $1372 | $2868 |
| Single with child | 2274 | N/O | N/O | N/O | N/O | N/O |
| Separated | 2274 | 1292 | 3010 | 2098 | 1372 | 2868 |
| Divorced | 2274 | 1292 | N/O | 2098 | 1372 | 2868 |
| Widowed | 2274 | 1408 | 3010 | 2098 | 1294 | 2868 |
| Domestic partner | N/O | 1292 | N/O | 2098 | N/O | 2604 |
| Married | 2274 | 1244 | 2676 | 1726 | 1294 | 2604 |
| Tampa, FL | ||||||
| Single | $1320 | $1,978 | $2972 | $1392 | N/A | N/A |
| Single with child | 1320 | N/O | N/O | N/O | N/A | N/A |
| Separated | 1320 | 2334 | 2972 | 1392 | N/A | N/A |
| Divorced | 1320 | 1858 | 2972 | 1392 | N/A | N/A |
| Widowed | 1320 | 2042 | 2972 | 1392 | N/A | N/A |
| Domestic partner | N/O | 1987 | N/O | 1392 | N/A | N/A |
| Married | 1320 | 2166 | 2224 | 1110 | N/A | N/A |
| Louisville, KY | ||||||
| Single | $1248 | $1518 | N/O* | $1384 | N/A | N/A |
| Single with child | 1248 | N/O | N/O | N/O | N/A | N/A |
| Separated | 1248 | 1864 | 2508 | 1384 | N/A | N/A |
| Divorced | 1248 | 1236 | 2508 | 1384 | N/A | N/A |
| Widowed | 1248 | 1302 | 2508 | 1384 | N/A | N/A |
| Domestic partner | N/O | 1518 | N/O | 1384 | N/A | N/A |
| Married | 1248 | 650 | 1978 | 1152 | N/A | N/A |
*Quotes are from 21st Century Insurance
| Chicago, IL | ||||||
| Single | $660 | $588 | $2026 | $524 | $852 | $1152 |
| Single with child | 660 | N/O | N/O | N/O | N/O | N/O |
| Separated | 660 | 666 | 2026 | 524 | 852 | 1152 |
| Divorced | 660 | 640 | N/O | 524 | 852 | 1152 |
| Widowed | 660 | 610 | 2026 | 524 | 852 | 1152 |
| Domestic partner | N/O | N/O | N/O | 524 | N/O | 1068 |
| Married | 660 | 578 | 1678 | 454 | 746 | 1068 |
| Civil Union | 660 | 556 | 1576 | 454 | N/O | N/O |
| Minneapolis, MN | ||||||
| Single | $992 | $1944 | $1618 | $642 | $1992 | $1848 |
| Single with child | 992 | N/O | N/O | N/O | N/O | N/O |
| Separated | 992 | 1944 | 1618 | 642 | N/O | 1848 |
| Divorced | 992 | 1584 | N/O | 642 | N/O | 1848 |
| Widowed | 992 | 1466 | 1618 | 642 | 1862 | 1848 |
| Domestic partner | N/O | 1944 | N/O | 642 | N/O | 1680 |
| Married | 992 | 894 | 1314 | 560 | 1772 | 1680 |
| Houston, TX | State Farm | GEICO | Farmers | Progressive | Nationwide | Liberty |
| Single | $1148 | $764 | $1604 | $742 | $724 | $1692 |
| Single with child | 1148 | N/O | N/O | N/O | N/O | N/O |
| Separated | 1148 | 890 | 1604 | 742 | 724 | 1692 |
| Divorced | 1148 | 764 | N/O | 742 | 724 | 1692 |
| Widowed | 1148 | 826 | 1604 | 742 | 660 | 1692 |
| Domestic partner | N/O | 764 | N/O | 742 | N/O | 1572 |
| Married | 1148 | 660 | 1304 | 640 | 660 | 1572 |
| Denver, CO | ||||||
| Single | $798 | $806 | $1770 | $740 | N/A | $1140 |
| Single with child | 798 | N/O | N/O | N/O | N/A | N/O |
| Separated | 798 | 940 | 1770 | 740 | N/A | 1140 |
| Divorced | 798 | 806 | N/O | 740 | N/A | 1140 |
| Widowed | 798 | 724 | 1770 | 740 | N/A | 1140 |
| Domestic partner | N/O | 806 | N/O | 740 | N/A | 1092 |
| Married | 798 | 586 | 1352 | 596 | N/A | 1092 |
| Civil Union | N/O | N/O | 1352 | N/O | N/A | 1092 |
| Phoenix, AZ | ||||||
| Single | $748 | $728 | $1722 | $662 | N/A | $1692 |
| Single with child | 748 | N/O | N/O | N/O | N/A | N/O |
| Separated | 748 | 728 | 1722 | 662 | N/A | 1692 |
| Divorced | 748 | 728 | N/O | 662 | N/A | 1692 |
| Widowed | 748 | 730 | 1722 | 662 | N/A | 1692 |
| Domestic partner | N/O | 728 | N/O | 662 | N/A | 1608 |
| Married | 748 | 490 | 1308 | 570 | N/A | 1608 |
| Oakland, CA | ||||||
| Single | $636 | $478 | $778 | $550 | $774 | $1132 |
| Single with child | 636 | N/O | N/O | N/O | N/O | N/O |
| Separated | 636 | 478 | 778 | 550 | 774 | 1132 |
| Divorced | 636 | 478 | N/O | 550 | 774 | 1132 |
| Widowed | 636 | 388 | 778 | 550 | 750 | 1132 |
| Domestic partner | 636 | 388 | N/O | 490 | 750 | 1008 |
| Married | 636 | 388 | 778 | 490 | 750 | 1008 |
| Portland, OR | ||||||
| Single | $1324 | $902 | $2226 | $1482 | $1198 | $1332 |
| Single with child | 1324 | N/O | N/O | N/O | N/O | N/O |
| Separated | 1324 | 902 | 2226 | 1482 | 1198 | 1332 |
| Divorced | 1324 | 902 | N/O | 1482 | 1198 | 1332 |
| Widowed | 1324 | 902 | 2226 | 1482 | 1090 | 1332 |
| Domestic partner | 1324 | 810 | N/O | 1218 | 1090 | 1224 |
| Married | 1324 | 810 | 1926 | 1218 | 1090 | 1224 |
N/O = Marital status not an option
N/A = No price quote available