How Does a Divorce Impact Your Insurance?

Written By Charlotte Insurance on February 28, 2019. It has 0 comments.

a pink paper heart ripped in half representing the difficulties of dealing with a divorce and the associated insurance changes

If you’re in the process of getting a divorce or separated from your spouse, you already know that your life has become a bit chaotic. There’s a lot of change, and you’re adjusting to a new “normal.” That happens even when the split is amicable.

In the middle of it all, you might not have thought about your insurance yet. Even though some changes can’t happen until the divorce is final, now is the time to get ready for it.

Home Insurance

During your separation, before your divorce is final, no changes can be made to your home insurance policy without the consent of both policyholders. You can’t delete your spouse from the plan or be deleted from it — not as long as you’re both still the “named insureds” on the joint policy. Once the divorce is final, whoever becomes the legal owner of the house can get a new homeowner’s policy in their name.

If you move out during the separation, you’ll need to think about insurance for your new home. If you’re renting, remember that  renter’s insurance is very inexpensive compared to homeowner’s insurance. If you own your new home, you can get a policy in your own name.

Auto Insurance

Before the divorce is final, update your auto insurance with the new address for each vehicle — assuming one of you moved out. Like home insurance, when you have a joint auto insurance policy that names you both, you can’t just delete your ex from it. Once the divorce is final, you can each get separate auto insurance policies. You may lose some discounts if you change carriers or if you’re no longer on a bundled or multi-driver policy.

If you have young drivers, they still need to be insured. When possible, it’s a good idea to add them to the insurance of both parents. But, at minimum, they need to be listed on the policy of the parent they live with the most. You may come to another agreement in your divorce settlement, but your teenage driver can’t be forgotten in the changes.

Life Insurance

Life insurance can be complicated when you get a divorce, especially if you have children or you pay or receive alimony. Here are some things to consider:

  • If your children are under 18 or you pay alimony, you may want to leave your ex-spouse as the beneficiary so neither party loses your income when you die.
  • If you name your children as beneficiary, they won’t be paid if you die while they’re under 18. Their benefits would either be managed by a court-appointed trustee or the benefits wouldn’t be paid until the beneficiary turns 18. You may want to talk to a family attorney about setting up a trust for your children.
  • If you receive alimony from your ex-spouse, you may want to include something in your divorce settlement that says life insurance cannot be canceled or changed without your prior knowledge.
  • In some divorce settlements life insurance is required for the ex-spouse paying alimony or child support.

Health Insurance

While you’re still legally married, both you and your spouse will continue to share a health insurance policy. Once the divorce is final, the spouse who wasn’t the policy holder needs to find new health insurance. If their employer offers health insurance, this should be an easy switch. If not, they have two options:

  1. Purchase health insurance directly from a health insurance provider.
  2. Sign up for COBRA and pay the full cost of their previous health insurance — the plan they had through their former spouse.

We know how difficult going through a divorce can be. It’s never easy, even when they’re for the best. Contact us at Charlotte Insurance and let us help you navigate the upcoming changes to your insurance.

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