Insurance Considerations During Divorce


We all think that it will never happen to us, but relationships sometimes fail.  

As two people begin to separate their emotional lives after many years together, the situation is further complicated by the need to disentangle friends, extended families, possessions, finances and, yes, insurance.

How Divorce Can Affect Your Insurance Needs

Your coverage and insurance requirements may change significantly following a divorce especially if you have children. Insurance is among the financial items you'll likely need to consider and review during a divorce. 

You'll want to make sure the appropriate protections are in place as you allocate belongings, move and begin your separate lives. The common insurance items often overlooked that you should consider include car insurance, homeowners or renters insurance, and any disability and life insurance.

If you are covered on your spouse's insurance, get complete medical and dental check-ups done for you and the children before the divorce is final. It's important to have any necessary procedures done now while you are covered. Begin checking into getting your own coverage for health, automobile, and home, and take these expenses into account for your post-divorce budget.

​Automobile Insurance:

After the divorce disposition, you will need to remove your ex-spouse from the auto insurance policy. You do not want to be held liable if your ex-spouse is in a wreck. Nor do you want him or her to receive any checks if a claim occurs. As for liability coverage, if you have children you may want to increase your coverage amount.

Notify your insurer of any changes to the ownership or designated drivers of a vehicle. Also, be sure to separate policies if your partner moves to another residence. If your partner is still paying for your insurance after a divorce, make sure the insurer has your contact information so you can be notified if payments are no longer made. 

If you have joint custody of teen drivers who are covered on your policies, you'll want to make sure they have appropriate coverage, too. Resident household members are usually covered, so if the children are principally members of a different household, they may need to be covered under that parent's policy.

Home Insurance:

A separation or divorce typically means that possessions will be divided between the individuals, and frequently, at least one of the partners will change residences. It is important to keep your insurer informed of changes in your residence and possessions so that you make sure you're still protected.

If you are on the mortgage loan and the deed, your name needs to be on the insurance policy. If ownership changed due to your divorce, you will need to update your policy accordingly.  

Did you change or update locks or security systems? If so, make sure to notify your insurance agency, as this could result in premium discounts. If you are renting, you should research purchasing renter’s insurance.  

Health Insurance:

Some divorces specify that whoever provided health coverage for the family during the marriage must continue to provide it after the divorce. This spouse may have to pay additional premiums to continue this coverage. Some group policies may routinely allow continued coverage for the family even after divorce.

If you have children, logistics and insurance can be complicated. Likely, the divorce decree states which parent’s insurance will be primary. If you do not have group health insurance options, you may want to look into an individual insurance policy for you and or your children. Speak with your insurer about whether a disability insurance policy may also be appropriate for you or your former partner.

Life Insurance:

The owner of a life insurance policy has all rights over the policy, such as changing the beneficiaries, borrowing against cash values, and canceling the policy. Your divorce settlement must address policy ownership. If you have minor children, do not name them as the beneficiaries; instead make sure to name a trustee or a contingent beneficiary.  

Review your life insurance policies and when appropriate, remove your ex-spouse.  If you have children, you may also want to reassess the value of your policies also. Children of single parents may be more susceptible to financial hardship if a parent passes away. You need to choose an affordable premium that also offers long-term financial security for your child if needed.

Regardless of what type of insurance policies you are changing or purchasing, make sure to do your homework. You want an insurance company that is reputable. You want an insurance agent with experience and with whom you feel comfortable. You want to have affordable premiums with appropriate coverage to protect the financial future for you and your family.

In an emotional situation like a divorce, it's important to step back and consider carefully how you will manage your transitions from a couple to two individuals. Making insurance decisions may help ensure that you, your partner and any children are properly protected. Knowing ahead of time how divorce affects your financial life will let you prepare for it and focus on moving forward with your new life.

Tags: Divorce Financial Tips, health insurance, property insurance, renters insurance, car insurance, life insurance, beneficiaries, home insurance, children, insurance protection

Filed Under: Divorce Tips, Insurance

This information is not intended to be a substitute for seeking legal advice from an attorney. For legal or tax advice please seek the services of a qualified attorney and/or qualified tax professional.

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Kimberly Surber

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Kimberly Surber is a Certified Financial Planner®  and a Certified Divorce Financial Analyst®; however such registration does not imply a certain level of skill or training and no inference to the contrary should be made. Information presented is for informational purposes only, does not intend to make an offer or solicitation for the sale or purchase of any securities, and should not be considered investment advice.  Kimberly Surber has not taken into account the investment objectives, financial situation or particular needs of any individual investor. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor's financial situation or risk tolerance. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed here. Past performance is not indicative of future results. Investments involve risk, including loss of principal and unless otherwise stated, are not guaranteed. Information provided reflects Kimberly Surber's views as of certain time periods, such views are subject to change at any point without notice. For a copy of our Privacy Policy, see below.

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