How does divorce affect insurance?
When you divorce, you separate your financial lives, and that includes insurance. You'll need to look at all four major personal insurance products for necessary changes: auto, home, life, and health.
Not only will you need to think about separating insurance, but if you have children, you will need to consider how each of your policies will cover the children.
Auto insurance after divorce
In your divorce, ownership of any vehicles that were marital property will be decided in your settlement. The registered owner of the car is required to be on the policy, and the garaging address where the car is kept must also be accurate.
That means that if you are now the sole owner of a vehicle and have moved to a new home, you need to get new insurance. Your ex will need to remove you from their policy on any vehicle they are keeping in the divorce.
If you have teen drivers and share custody, you must insure the teen on both parents' policies as they are different cars, different policies, and different addresses and the teen has access to both. However, if one parent has full custody, that parent will provide insurance for the teen. The teen will be covered as a permissive user on the non-custodial parent's policy.
When you divorce, you will lose some of the discounts associated with shared policies, like multi-policy and marital status. However, you can look for other discounts that apply to your new situation to save money.
Life insurance after divorce
After divorce, you should check on any existing life insurance policies and change your beneficiaries if necessary. Remember that you shouldn't name a minor child as the beneficiary of a life insurance policy; instead, name a trusted family member or create a trust for your children.
Your divorce decree may require a certain amount of life insurance, usually on the spouse who is paying child support and/or spousal support. Ensure that you have the correct coverage amount and that the beneficiary is named correctly. If you don't take care of this properly, you may find yourself back in court.
Health insurance after divorce
A divorce is considered a qualifying life event that allows the spouse who is no longer covered by an ex's health insurance plan to purchase coverage outside of open enrollment. If you have lost your health insurance coverage due to the divorce, you can sign up for your employer's plan, if available, or seek a plan on the private market.
Your divorce decree should determine which parent is responsible for providing health insurance coverage to minor children. If you decide to add the children to both parents' policies, the birthday rule will determine whose coverage is primary: the person whose birthday comes first in the year is the one whose health insurance is primary.
Home insurance after a divorce
Since home insurance is non-transferable, you will likely have to get a new policy after your divorce. If you are keeping the home, and it was previously insured in your ex-spouse's name or in both of your names, you will need to cancel that policy and get a new one.
If you have sold the home and are both moving to new locations, you'll both need to get insurance on your new homes.
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