Divorcees' Auto Insurance: Good, Bad, Or Ugly?

Divorce is a difficult time for any couple, and it can be hard to know what to do with your insurance policy. In most cases, you will need to cancel your existing policy and take out a new, individual one. This is because insurance companies view married people as safer drivers and offer them discounted rates. Divorced drivers are seen as more likely to make a claim, and so their premiums are often higher. However, there are ways to lower your premium after a divorce, and it's worth shopping around to find the best deal.

Divorced drivers pay more for auto insurance than married drivers

Divorce can be a stressful time, and one of the many things to consider is how it will impact your auto insurance. Unfortunately, divorced drivers do pay more for auto insurance than married drivers. This is because married drivers are seen as less risky clients by insurance companies. There are a few reasons for this.

Firstly, married drivers are often considered more financially stable, which can influence their insurance rates. Additionally, data shows that married couples file fewer claims than single, divorced, or widowed drivers, which contributes to their classification as less risky. As a result, the average married couple pays $116 per month for car insurance, while the average divorced driver pays $1,486 per year, which is $99 more than a married driver.

Another factor that can impact insurance rates is homeownership. Married people are often homeowners and can bundle their policies, covering multiple vehicles and insuring more than one driver on one policy. This can lead to additional discounts and lower rates. On the other hand, divorced individuals may need to purchase their own auto insurance and file for a vehicle title change in ownership with the state, which can increase costs.

It's important to note that insurance rates can vary by carrier, and there may be ways to lower your premium after a divorce. For example, some companies allow you to "split" policies after a divorce, staying with the same company and avoiding the need to purchase a new policy. Additionally, removing your former spouse from your policy can also help reduce your premium, as you are removing a source of risk.

While it may seem unfair that divorced drivers pay more for auto insurance, insurance companies base their rates on historical data and statistical correlations. However, it's always a good idea to shop around and compare rates from multiple carriers to ensure you're getting the best value for your needs.

Divorced drivers file more claims than married drivers

It is a common perception that married people are more financially stable and cautious, and this perception extends to their driving habits. This is reflected in their insurance premiums, with married drivers paying less than single, divorced, or widowed drivers. This is because, statistically, married drivers are less likely to file a claim, and are therefore considered less risky by insurance companies.

On the other hand, divorced drivers are seen as more likely to file a claim and are, therefore, placed in a higher-risk category. This results in divorced drivers paying higher premiums than married drivers. The difference in premiums is not a punishment for being divorced, but rather a reflection of historical data and statistical correlation.

The impact of marital status on insurance rates was highlighted in a recent study by the Consumer Federation of America (CFA). The study found that four of the six largest insurance companies increased premiums for women whose husbands had died by an average of 20%, with rates for single, separated, and divorced drivers also being higher than those for married drivers.

It is worth noting that the theory that married individuals are more responsible and cautious drivers is not supported by significant data, according to the CFA. Despite this, insurance companies often offer discounts to married couples, which may be seen as unfair to single, divorced, or widowed drivers.

While divorce can have a financial impact on insurance rates, there are ways to mitigate these costs. Divorced individuals can compare quotes from multiple insurance carriers, adjust their coverage and deductibles, and seek out other discounts to find the best rates. Additionally, divorced parents with teen drivers may need to include their children on both parents' policies if they have shared custody and the teens drive both parents' cars regularly.

Splitting a joint auto insurance policy

Living Situation and Vehicle Ownership

Firstly, your living situation and vehicle ownership will play a significant role in how you split your auto insurance policy. If you and your ex-spouse continue to live together and own vehicles jointly, you may choose to stay on the same policy or switch to separate policies. Staying on the same policy can help maintain existing discounts, but it may also lead to financial complications. On the other hand, if you move to separate residences, you will need to get your own individual policies as the vehicles will no longer be parked at the same address.

Consent and Notification

Before making any changes to your joint policy, ensure you have the consent of your ex-spouse. Most insurance companies require the consent of both parties to remove a spouse from the policy or cancel the existing policy. Additionally, notify your insurance agent or company about your separation or divorce date in advance. This will allow you to understand the requirements and explore new insurance options.

Teen Drivers

If you have teenage children who drive, you will need to include them on both parents' new individual policies, especially if they regularly drive both parents' cars or park their cars at each residence. Check with your insurance company to determine the specific requirements for insuring teen drivers.

Address and Registration Updates

Update the address for each vehicle on your policy as soon as one of you moves out. Additionally, remove the other driver from the car's registration and title to ensure you are not held responsible for any accidents or claims involving your ex-spouse's vehicle.

Compare Insurance Options

Shop around for the best insurance rates and options. Compare quotes from multiple carriers to find the most suitable coverage for your needs. You may also consider bundling multiple policies (such as auto, life, or homeowners insurance) with the same company to take advantage of bundling discounts.

Timing

Ensure there is no gap in your coverage by starting your new policy on or before your shared policy ends. This will provide continuous coverage for both parties.

Removing a spouse from a policy before a divorce

When a couple decides to divorce, it can be challenging to navigate the various legal and financial complexities, especially when it comes to insurance policies. While it is essential to consult with a family law attorney or a legal professional for personalized advice, here is some general information regarding removing a spouse from a policy before a divorce:

Health Insurance

In most cases, it is not possible to remove a spouse from a health insurance policy before the divorce is finalized. Health insurance plans typically cover eligible dependents, including children, but a spouse can only be removed once the divorce is final. Removing a spouse prematurely may violate legal restrictions and result in negative consequences. Therefore, it is crucial to adhere to any court orders regarding insurance coverage during the separation and divorce process.

During a divorce, if one spouse has health insurance through the other spouse's employer, the coverage usually continues until the divorce is finalized. Employers generally consider the spouse as an eligible dependent until the official end of the marriage. However, it is important to note that each employer's policies may differ, so checking the specific details is essential.

Once the divorce is finalized, the non-employee spouse may lose health insurance coverage and need to explore alternative options. They may be eligible for COBRA continuation coverage, which can last up to 36 months, or they can purchase a plan through the Health Insurance marketplace as divorce is considered a qualifying life event.

Life Insurance

Regarding life insurance, there is no legal requirement to maintain a policy that pays an ex-spouse or to provide life insurance for them. Individuals have the right to change their plan and name a different beneficiary at any time. However, if the life insurance policy includes a savings account component, it may be considered an asset, and there could be restrictions on cancelling the policy if it involves returning money.

Auto Insurance

While the specific impact of divorce on auto insurance rates can vary, it is essential to review and update auto insurance policies after a divorce. Some factors that can affect auto insurance rates include changes in driving records, credit scores, and vehicle ownership. Additionally, removing a spouse from a joint auto insurance policy may result in higher rates for one or both individuals, especially if they have a clean driving record. It is recommended to compare rates and explore different insurance providers to find the best coverage and rates after a divorce.

In conclusion, while removing a spouse from a policy before a divorce is generally not advisable, it is essential to understand the legal and financial implications of any insurance changes. Consulting with legal and insurance professionals can help individuals navigate these complexities and make informed decisions during this challenging time.

The legal and financial risks of sharing a policy after divorce

Divorce and car insurance can be challenging to navigate, especially when a policy is shared between former spouses. While it is essential to seek legal advice for your specific situation, here are some general legal and financial risks to consider when sharing a car insurance policy after a divorce:

Legal Considerations:

• Policy Ownership: After a divorce, the car insurance policy should be revised to reflect the change in ownership. If the vehicle is jointly owned, both spouses may be considered "named insureds" on the policy. In this case, it is advisable to cancel the joint policy and obtain individual policies to ensure continued coverage.
• Other Drivers on the Policy: If there are children or relatives named on the shared policy, they will need to be reassigned to one of the new individual policies. This may need to be specified in the divorce decree, so it is essential to consult with your lawyer.
• Vehicle Title and Registration: Divorcees may need to file for a change in vehicle ownership with the state and update their address and contact information, especially if they have moved to a new location.

Financial Considerations:

• Premium Costs: Divorced drivers typically pay higher premiums for car insurance than married drivers. This is because divorced drivers are seen as riskier clients by insurance companies, as they statistically file more claims.
• Financial Responsibilities: If both spouses are named on the policy, they are usually responsible for paying the premiums. When sharing a policy after a divorce, ensuring both parties fulfil their financial obligations can be challenging and may require ongoing coordination.
• Impact on Credit Score: In some cases, sharing a policy after a divorce may impact the credit scores of both individuals, especially if there are joint financial responsibilities tied to the policy.
• Changes in Coverage Needs: After a divorce, your insurance coverage needs may change. For example, you may no longer require coverage for multiple vehicles or drivers. Review your policy to ensure it aligns with your current situation.
• Liability and Risk: Sharing a policy with your former spouse may expose you to potential liabilities and risks. For instance, if your ex-spouse is involved in an accident and files a claim, it could impact your premiums or coverage.

To mitigate these risks, it is generally recommended to separate car insurance policies after a divorce and obtain individual coverage. This allows for a clean break and ensures you are not financially tied to your former spouse through a shared policy. Consult with your lawyer and insurance agent to understand your specific situation and make the necessary adjustments to your car insurance policy.

Frequently asked questions