Texas Governor Greg Abbott has signed Senate Bill 1238 into law, ending the practice known as the “widow penalty” in insurance rate calculations. The law, which takes effect on September 1, 2025, prohibits insurance companies from increasing auto and home insurance rates for individuals solely because their spouse has died.
The legislation was primarily sponsored by two Houston-area lawmakers: State Senators Lois Kolkhorst (R-Brenham) and Mayes Middleton (R-Galveston). The bill passed through both chambers of the Texas legislature this month, with the Senate concurring with House amendments before Abbott signed it into law last week.
The ‘Widow Penalty’ Problem
The “widow penalty” refers to the practice of insurance companies reclassifying surviving spouses from “married” to “single” after their partner’s death, resulting in higher insurance premiums. A 2015 study by the Consumer Federation of America found that four major auto insurance providers – GEICO, Farmers, Progressive, and Liberty – routinely implemented this practice, leading to an average rate increase of 20% for widows and widowers.
Evelyn Delgado of New Braunfels shared her personal experience with this practice during a Senate committee hearing in March. After losing her husband to kidney disease, Delgado notified her insurance company to remove him from her policy. Contrary to her expectations of a rate decrease, she was informed that her premium would increase by $280 annually because she was now classified as single rather than married.
Delgado’s experience was not isolated. According to Ann Baddour, director of the Fair Financial Services Project at Texas Appleseed, many widows and widowers faced similar situations. Texas Appleseed, a nonprofit organization, had been investigating insurance pricing fairness and connected Delgado with others who had experienced the “widow penalty.”
Impact of the New Law
The new legislation aims to protect vulnerable individuals, particularly women, who are disproportionately affected by such insurance practices. Baddour noted that while it’s difficult to estimate the exact number of Texans affected by the “widow penalty,” there are over 1.1 million widows in Texas, with women making up about 76% of this demographic.
Once the law takes effect, insurance companies will be required to maintain the “married” rate classification for surviving spouses. Baddour advised consumers to review their insurance policies after September 1, 2025, to ensure they are correctly categorized and potentially eligible for lower premiums.
