What happens to your car insurance during a divorce?
Does either spouse need a new policy?
When starting the divorce process, you may have to make several decisions regarding how to separate your assets. Regarding car insurance, you can remove your spouse from the policy even if you are separated and the divorce has not yet been finalized, according to Jill Roth, Executive Vice President at the insurance company Virginia Ahart, Frenzy & Smith.
Most insurance companies require married couples to share the car insurance policy for all vehicles kept at the same residence. If you move during or after the divorce and take one of the cars with you, your monthly premium is likely to change, which is why most policyholders require a separate policy in this case. According to the Insurance Information Institute, if you or your ex-spouse change your address, you should obtain a separate car policy immediately.
Note: Most insurance companies require you to get your partner’s consent before removing them from the insurance policy.
How does divorce affect insurance costs?
Whether you separate the policy or remain on the current policy, your annual insurance cost may increase or decrease based on your driving record, claims history, available discounts for multiple drivers or vehicles, and your credit history (in some states).
If your ex-spouse has some accidents on their record, it may have pulled down your rating, so your premium might decrease when you separate the car insurance policy. However, if you have claims and your ex-spouse does not, you may be the one facing higher rates.
Note: Most car insurance companies offer discounts for married couples, as well as for those with a policy for more than one vehicle, which means your policy will likely be more expensive once you separate or divorce. However, the difference is not significant. According to The General, a divorced driver may pay about $50 more every six months for car insurance coverage compared to a married driver.
There are many financial factors that change during a divorce, according to Roth. For example, refinancing a home or buying a car can affect your insurance rating – a unique rating kept by each insurance company based on their assessment systems. However, each proprietary rating system is different, so some factors may have a more significant impact on one company’s policies than another’s.
Steps to separate car insurance after divorce
Separating car insurance after a divorce requires some planning and research before finalizing the divorce. Here are the recommended steps to follow when separating the car insurance policy:
Contact your insurance agent
Once you know your separation or divorce date, reach out to your agent or insurance company in advance. Find out how your current insurance provider handles vehicles, addresses, separations, and divorces, and start looking for new car insurance options with your information after the divorce, such as the new ZIP code.
Note: Depending on the state you live in and the terms of your policy, there may be a specific time frame to notify your insurance company of your divorce. Be sure to check with your insurance agency.
If one of you moves out of the previous shared home, you will need to update the residence address for the transferred car if you are keeping it on the same policy, or issue separate policies for each spouse. Discuss your situation with your agent.
Sorting
Car Titles
If the cars were previously registered in both spouses’ names, it is customary to rename the cars so that they are registered in the name of only one person. Contact your insurance agent and local Department of Motor Vehicles office to determine the correct process. You may also need to update your state’s registration and address records if you are changing your last name due to divorce.
Agents typically prefer to separate the insurance policy as soon as possible from the Department of Motor Vehicles registration date, according to Ruth.
Requesting to Remove Your Location
Finally, you will obtain your own policy for the car registered in your name. Ensure you have the new policy in place before removing yourself from the previous policy. You will generally need to sign a removal request.
Ensure Your Teen is Covered
If you have children with your ex-spouse, there are other factors to consider when separating the car insurance policy.
In most cases, all family members who have a driver’s license should be listed as drivers on the insurance policy, which means if you have a child of driving age, they must be included on both parents’ car insurance policies. It might be possible to add a teenager to only one parent’s policy even if child custody is shared 50%, but this depends on the company’s policy. For example, The General requires that your child be listed on the insurance policy if they drive your car more than 12 times a year.
Note: Ruth indicates that the primary address listed on the teen’s license usually refers to the policy that will cover the teenager, but it’s a good idea to check with your insurance agent.
Frequently Asked Questions
Can I stay on my ex-spouse’s car insurance after divorce?
You may be able to do so until the renewal date, depending on your insurance company. However, you will want to find out if this is allowed before finalizing your divorce and ensure you have a new policy in place before allowing the previous policy to expire.
How long can a divorced spouse stay on car insurance?
According to Ruth, some insurance companies may allow you to remain on a joint policy until the policy renewal date. This could save you some money. However, other insurance companies will expect couples to obtain separate policies when their divorce is finalized.
Why did my car insurance go up after divorce?
The insurance rate for individuals transitioning from “married” to “divorced or single” may increase by between 0% and 34%, according to research from the American Consumer Federation. The potential increase makes this a suitable time to shop around for the best coverage and rate for your needs.
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editorial process to learn more about how we verify facts and maintain our content’s accuracy and reliability.
Progressive. “How Insurance After Divorce Works.”
Insurance Information Institute. “Separation or Divorce.”
The General Insurance. “Car Insurance After a Divorce.”
Consumer Federation of America. “New Research Shows That Most Major Auto Insurers Vary Prices Considerably Depending on Marital Status.”
Source: https://www.thebalancemoney.com/car-insurance-divorce-rules-527482
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