Divorce and Insurance changes

To say that an insurance company doesn’t care is a loaded statement. But in the case of divorce, it often really does not matter to the insurance company.

First, insurance insures a person. Matters of marriage and children or homes or cars or jobs or hobbies are largely peripheral to insuring a person. In the case of car insurance, suppose a family had two cars, both insured of course. In most situations the insurance company lists the husband as the primary driver on one car, the wife on the other. In the case of a divorce, the only real issue, in most cases, is which car goes to what new address?

Auto insurance insures a person on a car. Two people can be insured on one car’s policy, but the rates are mostly set based on the person driving, and then on the car, and then on where and how the car is used. If you have two cars, there will be two policies. Similarly, if there are three cars but two drivers in a household, then there are three policies, but with allowances for the two drivers, and again for how and where the car commonly is operated.

Auto insurance is rated for a person, with his or her driving experience, driving so much over a period of time, and in what areas. If one person in the divorce moves to a high traffic (often, then, a high accident or high theft) area, then that person’s auto insurance rates will likely rise. The divorce didn’t do it, the move to more challenging drive did. But then if the person moving goes to a location closer to work and it is a comparatively low hazard place for cars, then that policy will possibly be improved.

One thing that often, but not always, cannot be helped is the loss of a multi-car discount. If the family has two cars and there is a divorce, then when one policy is spun off to a separate residence and uncoupled with the other policy, then the multi-policy discount disappears. But the same thing could happen if a child is of age and takes one of the cars to a new job and residence somewhere else. While the child is in college, with some common limits, the car’s policy usually stays coupled to the home and the discount stays. The discount or its loss is not tied to divorce, simply to the number of cars insured, or number of policies.

Some companies continue to offer a discount if, say, you also add a homeowners (or renters) policy to your auto policy at the new address. Since one of the divorced couple is setting up a new residence, then that one has insurance needs as well. The experience the insurance company had with the couple will usually be used to qualify the now-single person who leaves.

In the case of health insurance, most policies have provision for divorce which if the spouse is covered while they were married, then permits the one leaving to continue coverage under a new policy. If the two both work where they are insured at work, then whether in separate businesses or at the same business, they already have a policy. Once more, the only change would be that one has a new address, or perhaps the wife might revert to her maiden last name.

Life insurance is the particularly sticky issue, however. Some does not change, such as life insurance benefits at the place where you work. There might, but not always, be a change of beneficiaries, but even if the beneficiary doesn’t change (for whatever reasons) there would need to be a note of where the insurance company would need to find the beneficiary if he or she or the primary insured is no longer at the same address. Life insurance is sometimes an issue in “splitting the sheets” that a court may address, but only if one spouse’s attorney or the other brings it up. A look at the policy will tell who owns the policy, and if the court doesn’t mandate the matter, then that pretty-well settles it.

Divorce is usually an emotionally-laden thing. The biggest issue is not who gets the insurance policy on this car or that, but who gets which car. The issue is not who gets the insurance policy on the house, but who gets the house. With the hurt feelings, and rarely absent desires for hurt or revenge to the other, the insurance company may only get finicky with policy changes if the two parties start giving competing claims. So, if the insurance agent suddenly is refusing to make changes in policies or coverages until they see letters from lawyers or divorce decrees, it almost always is because the other spouse told them something substantially different. Then, and only then, will most insurance agents be restrictive or helpful. If the spouse wants to change something to the husband’s coverage, but the husband owns the policy, then that would make any agent want to see it authoritatively “in writing.”

As a former insurance agent, a couple came in to adjust insurance information because they were divorcing. They were proper, surprisingly pleasant, and business-like during most of the session. The only time that they gave me any cause for concern was when they started arguing over a certain policy because one auto policy number looked “more cool than the other.”