Insurance after divorce is an area that many people don’t consider when they are going through this difficult life change.
You get the dog, he keeps the cat.
If only all the decisions of a divorce were that simple, right?
Breaking up is hard to do.
The break-up of any relationship will have difficult, and sometimes painful choices impacting everyone involved.
Creating a new insurance plan after divorce is an issue that is absolutely necessary and unavoidable.
What happens to the car and home insurance policy after a divorce? What changes are necessary concerning your life insurance plan?
These questions may be some of the last things considered. But, insurance is an important part of everyone’s finances, and, finances are a big part of every divorce.
Someone will have to get a new policy, certainly. But both of you will have new insurance needs. Don’t overlook the importance of meeting with your insurance advisor to discuss how this change in the relationship will change your insurance risks, needs, and cost.
Here are just a few issues that will impact the cost of your insurance following a divorce.
- A married person almost always has a lower insurance cost rating than a single person.
- If you have a new address, your insurance premium will be affected by that new location as well.
- Bundling discounts might not be available: discounts such as “multi-car”, or “auto-home”, depending on the settlement of those assets.
In a divorce, the negative effect of the break-up on the kids is unavoidable. The insurance policies that should have the highest priority when it comes to children, should be the life insurance policies for the parents, and the provision of health insurance for the kids.
But the presence of children has to be addressed when it comes to car and home insurance too.
At some point, the kids will likely get their driver’s license and become drivers.
- Should they be rated on Mom’s policy or Dad’s?
- What if Dad buys the car, but the kids live with Mom 90 percent of the time?
- Who’s going to get sued if/when the kid hits someone while driving the car?
Spoiler Alert: Adding kids to your auto insurance will increase your premium by a minimum of 30%, likely more, with ANY insurance company. This is true whether parents are married or divorced.
I’m not trying to be negative here, but this is the financial reality. So, your young drivers are going to add risk to both of you. That risk is going to bring with it additional costs. How the cost will be shared is no small issue.
Kids have a lot of stuff too. The custody of children is usually split between the parents in some manner. It usually ends up with the kids having “stuff” at both homes.
So, in theft, fire, or other home insurance claim that “stuff” needs to be accounted for.
There is also that awkward situation people find themselves in who are friends with the both of you. Usually, your friends and his friends will show their support by choosing sides.
But there are others that you work with that will have to navigate this new relationship too, like your insurance agent…
Divorces are not always a cordial situation with an open, clear dialog. I can tell you, that this often puts your insurance agent in an awkward situation. We are not in a position to play favorites or choose sides, regardless of personal feelings.
The insurance policy is a contract between the insurance company and the insured (the two spouses, in this case). When your relationship splits up, new contracts have to be put together to protect your new situation and risks.
A divorce doesn’t necessarily mean one of you needs to get a new insurance company or agency to work with. If you have a good relationship with your company or agent, there is no reason to think it can’t continue. But if you were not involved in choosing your insurance agent, and you haven’t met with them to discuss your needs, I would strongly encourage it now.
I have helped numerous clients navigate their insurance changes through a divorce. The professional advice I give them is not based on emotion, nor should it be. You’re in a vulnerable phase of life and your insurance, at many levels, is more important in these times than most others.
No matter what phase of life you are in, your insurance plan is an important part of your financial plan.
I would welcome the chance to have a conversation about how we might be able to help you create the most accurate and efficient insurance plan for you and your family.
Give me a call at 405-340-0606.
Or complete this form and I’ll reach out to you.