California Court Ruling on Auto Insurance Premiums
In a surprising decision, Californians who are divorced, widowed, or single may face higher auto insurance rates. A ruling from the California Court of Appeals upheld a regulation dating back to 1996, permitting auto insurance companies to consider marital status when determining premiums, citing a “substantial relationship to a loss.”
Insurance companies like Farmers Insurance point to historical data indicating that married drivers tend to file fewer claims compared to their unmarried counterparts. For instance, a report from GEICO reveals a difference in premiums: a single driver might pay $331.40 for six months of coverage, whereas a married driver with a similar profile pays about $250.40.
Adamma Ison, alongside other unmarried individuals, took legal action against the state insurance commissioner in 2022, arguing they were facing premiums that were roughly $56 to $100 higher than those charged to married drivers.
The lawsuit claimed that such practices contradict the state’s civil rights laws, which generally prohibit discrimination based on marital status, and earlier insurance anti-discrimination regulations. Lawmakers had revised these laws after 2004 to include armed status among protected categories.
But the insurance commissioner defended the existing regulation, asserting that the civil rights law shouldn’t give anyone rights or privileges limited by law. The argument was that this would allow the commissioner’s regulations to stand.
The appeals court concurred, remarking that voters had previously passed legislation in 1988 establishing the insurance commissioner’s role and authority to set insurance rates. This also included a stipulation that the law was “subject to” conflicting statutes.
The court noted that a memo from a lawmaker who had amended the law indicated that the intent was not to override the insurance commissioner’s ability to define criteria in setting rates.
Consumer advocacy groups have criticized this ruling. William Pletcher, a leading attorney with a consumer watchdog organization, highlighted that losing a spouse doesn’t inherently make someone a riskier driver. He raised concerns about Commissioner Ricardo Lara, suggesting he backs discriminatory practices affecting widows, divorcees, and other single individuals.
Justice Alison Teutcher dissented from the majority opinion, emphasizing that the insurance commissioner should not be able to selectively adhere to civil rights laws.
In a response to the ruling, the state Department of Insurance asserted that the decision would not impact Californians. A spokesperson mentioned, “This ruling maintains the arbitrary rating factors in place since 1996, unchanged for three decades.” According to them, no one should expect any adjustments to their auto insurance premiums as a result of this ruling.
