No one will ever be prepared for the emotional toll that a divorce will put on a person. It will take a long time for both spouses to get their lives back to normal unfortunately life goes on and there are things to tend too. In most divorces there is property that will need to be assigned to someone and then the insurance policies will need to change. We will look at the different types of insurance policies and how they may need to change after a divorce.
Home Insurance Policy Changes
The first and most obvious policy that will be affected is your homeowner's insurance policy. If one of the parties will continue to own the property the insurance should have that person as the primary named insured. Most insurance companies use credit to rate the policy so expect the premium to adjust to the new credit score. It is a good idea to review coverage and deductibles with your agent to make sure everything is properly insured and within your budget.
There may be additional coverage on the home insurance like a jewelry floater or fine art so be sure to adjust those as necessary. Usually most property is split in half so the amount of personal property coverage should be reduced to reflect this change. If the woman makes a name change be sure to have that reflected on the policy as well.
Life Insurance Policy Changes
Given the situation your primary beneficiary will likely need to change. This is easily done by completing a change of beneficiary form and submitting it to the insurance provider. Be sure to look at the other beneficiaries and make any changes that make sense such as change in percentage of death benefit.
It is also very important to update your new address on all policies but most importantly the life insurance policy. If there is alimony involved in the divorce settlement there will likely need to be life insurance in force so payments can continue in the event of a death to the parent.
Auto Insurance Policy Changes
If you both have different cars it is easy to change the household to reflect the separation of vehicle policies. Be sure that any automatic billing is updated for the new accounts and address changes. Review the policies to make sure you can afford the deductible and confirm if there is any coverage you may need such as rental car reimbursement. A change in ownership of a vehicle is likely and so if the name of the primary insured on the policy.
Discounts That May Be Removed
Unfortunately there are many discounts that will affect both spouses when a divorce happens. In most cases discounts will be removed and the premium will increase. Here is a breakdown of the most common discounts that will be affected:
- Multi-car discount - If you had two or more vehicles insured with one company and now separate them it will remove this discount and increase each policy by 10-20%.
- Auto and Home discount - When you combine auto and home insurance policy with the same company the discount can be 15-25%. This discount will no longer help the spouse who no longer has the home insured in their name. It does affect both the home and auto policies so make sure you know how this will increase the policies.
- Affinity discount - If one spouse is employed with a preferred vendor they will likely get a discount of 5-10%. These occupational discounts tend to help law enforcement, teachers and doctors.