Prevent the Widow Penalty Act

AN ACT
TO PROHIBIT INSURERS FROM USING WIDOWHOOD OR THE DEATH OF A SPOUSE AS A RATING, UNDERWRITING, OR ELIGIBILITY FACTOR IN PERSONAL AUTOMOBILE INSURANCE; TO REQUIRE COMPLIANCE AND REGULATORY OVERSIGHT; AND TO PROVIDE AN EFFECTIVE DATE.

SECTION 1. Short Title

This act may be cited as the “Prevent the Widow Penalty Act.”

SECTION 2. Legislative Findings and Purpose

(A) The General Assembly finds that:

  1. Personal automobile insurance premiums should be based on a driver’s actual risk of loss and driving behavior, not on personal life circumstances unrelated to driving safety.
  2. South Carolina residents who experience the death of a spouse should not face additional financial hardship through increased insurance premiums or adverse underwriting decisions.
  3. The use of widowhood as a rating or underwriting factor is inconsistent with principles of fairness and consumer protection.

(B) The purpose of this act is to prohibit discriminatory insurance practices based on widowhood and to ensure equitable treatment of policyholders who experience a change in marital status due to the death of a spouse.

SECTION 3. Definitions

As used in this act:

  1. “Insurer” means any insurance company or other entity authorized to write personal automobile insurance in this State.
  2. “Personal automobile insurance” means insurance coverage for private passenger motor vehicles used primarily for personal, family, or household purposes.
  3. “Marital status” includes classifications such as single, married, divorced, widowed, separated, or any other category used by an insurer.
  4. “Widowed” or “widow/widower” means a policyholder whose spouse has died.

SECTION 4. Prohibition on Use of Widowhood as a Rating Factor

(A) An insurer may not use the fact that a policyholder is widowed, or has experienced the death of a spouse, as a rating factor, underwriting factor, or eligibility criterion in any personal automobile insurance policy issued or renewed in this State.

(B) An insurer may not, solely or primarily because an insured became widowed:

  1. increase a premium;
  2. impose a surcharge;
  3. deny a discount;
  4. reassign the insured to a higher-risk tier or rating classification; or
  5. otherwise adversely change the terms or conditions of coverage.

(C) Insurers shall treat policyholders who become widowed no less favorably than similarly situated married policyholders for purposes of rating, underwriting, and eligibility.

SECTION 5. Permissible Rating Factors

Nothing in this act prohibits the use of actuarially sound rating or underwriting factors permitted under South Carolina law, provided that such factors:

  1. are not a direct or indirect proxy for marital status; and
  2. do not discriminate against widowed individuals.

SECTION 6. Compliance Filings

(A) Each insurer writing personal automobile insurance in this State shall certify to the South Carolina Department of Insurance that its rating plans and underwriting guidelines comply with this act.

(B) Insurers shall provide rate manuals, underwriting guidelines, or other documentation upon request by the Department.

(C) The Department may require additional documentation as necessary to ensure compliance.

SECTION 7. Enforcement

(A) The South Carolina Department of Insurance shall enforce this act.

(B) A violation of this act constitutes an unfair or deceptive insurance practice.

(C) The Department may order corrective action, require restitution to affected policyholders, impose administrative penalties, and suspend or revoke an insurer’s authority for willful or repeated violations.

SECTION 8. Construction

This act shall be liberally construed to protect consumers from discriminatory insurance practices based on widowhood or changes in marital status.

SECTION 9. Applicability and Effective Date

This act applies to all personal automobile insurance policies issued, delivered, or renewed on or after January 1, 2027.