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Michigan allows auto insurance companies to charge women, widows higher prices

Posted: 7:05 PM, Sep 06, 2018
Updated: 2018-09-07 10:38:54Z

LANSING, Mich. — Insurance companies in Michigan aren't just ignoring laws protecting against discrimination based on gender or relationship status, but in many cases, the state is rubber stamping the practices, according to an investigation by Scripps station WXYZ in Detroit.

Last fall, Melinda McKee’s husband Jim got news that stopped them in their tracks. He had stage four lung cancer. 

In January of this year, he died.

“I am still mourning his loss,” McKee said. “I miss him like crazy.”

She called her insurance company to cancel the insurance on his leased car and got shocking news.

“I got a letter from AAA that said because I am a widow I am in a higher risk bracket,” McKee said.

Even though she has a perfect driving record, McKee says her rates went from under $200 for two vehicles to more than $300 for one vehicle.

“It is completely unfair,” she said.

“It is not legal,” Steve Gursten, head of Michigan Auto Law said. “There is a law right on point that says women can not be charged more than men, nor should they by the way, because statistically, women are safer drivers.”

Scripps station WXYZ decided to see independently how gender and marital status impacted rates.  

Reporters requested quotes from two major companies that provide quotes online. That allowed them to change only gender or marital status on the application.

As a single woman, Allstate’s Esurance quote was $294 per month. Change the gender to male, and the quote drops to $230 for the same policy. The penalty for being a woman was 28 percent.

At Progressive, the female penalty was 18 percent.

In both cases, married men paid more than single men and single women more than married women.

WXYZ went to the Insurance Alliance of Michigan. 

According to the Insurance Alliance of Michigan, the state insurance commissioner rubber stamps all rates in Michigan as reasonable.

“Because the department can pull their license, can fine them. There is all sorts of recourse there if you feel you are being mistreated by the insurance company,” Peter Kuhnmuench, executive director of the Insurance Alliance of Michigan, said.

State Insurance Commissioner Patrick McPharlin was not available for comment. But public information officer Andrea Miller said gender discrimination is allowed in pricing.

“That is something legal when they are selling the group insurance policies,” Miller said.

It turns out there is a law meant to let groups, like AARP, offer less regulated insurance policies to save members money. Insurance companies have figured out that if they file paperwork saying they are a  group, they can skirt regulations.

“They are following the law,” Miller said.

So what do the insurance companies have to say?

AAA said there are systems in place meant to prevent any discrimination based on gender and marital status in pricing.  

It said it would work to fix this issue and reached out to McKee. 

It contacted the independent agent that sold her policy. In an e-mail to that agent, AAA explained that if a rate score changes when a spouse dies the agent simply has to put in a request to maintain the lower score. AAA says it does not want anyone to face higher rates because they lost a spouse.

Progressive and Esurance did not confirm or deny that gender and marital status impact pricing.

“We work to provide consumers accurate quotes using multiple rating factors that are actuarially justified and proven to help predict risk,” Progressive said in a statement.

“Insurance is a highly regulated industry and Esurance is in compliance with the state laws,” Esurance said in a statement.