Texas Passes Law Ending Insurance 'Widow Penalty' on Auto and Home Policies

Texas Governor Greg Abbott signed Senate Bill 1238 into law, prohibiting insurers from increasing auto and home insurance premiums solely due to the death of a policyholder's spouse.

Effective September 1, 2025, the law targets the practice known as the "widow penalty," where insurers reclassify surviving spouses from "married" to "single" status, leading to higher rates. This legislation responds to longstanding concerns, including a 2015 Consumer Federation of America study that found major insurers like GEICO, Farmers, Progressive, and Liberty routinely applied such rate increases averaging 20%.

The bill, led by Senators Lois Kolkhorst and Mayes Middleton, received swift legislative approval. Advocates highlighted the financial strain the widow penalty imposes on surviving spouses, especially those on fixed incomes relying on Social Security.

Texas Appleseed and consumer testimonies emphasize the importance of regulatory oversight to ensure fair insurance pricing and encourage policyholders to verify their marital status classification upon policy renewal post-law implementation. This law reflects a broader regulatory focus on fair treatment in insurance underwriting and premium setting practices related to marital status.