Impact On Car Insurance Rates After Divorce

| February 11, 2013 | 0 Comments
Short Answer: After divorce, generally your car Car Insurance Rates After Divorceinsurance rates would go up marginally 1% to 1.5%. If you as a couple have two separate car insurance policies then the entire process is quite easy. You just remove each others name from your respective individual plans. That’s it! However, if the car insurance policy is held jointly then there are certain things which need to be taken care off. What we need to first understand that the goal of a divorce is not only to get separate but also to ensure that all the assets and jointly held financial commitments are taken care off. There are certain basic principles which we need to understand when we consider car insurance after divorce. These are
  • If the car insurance policy is jointly held, then one cannot remove the other person without his/her consent.
  • Liability on car insurance is still shared between the couple if you are living on the same address after divorce. You can only remove the name once you have separate addresses.
  • Insured person to be listed on the title is a must for most of the car insurance companies. After divorce, the first thing a couple does is search for separate accommodation for one or the other. If a person is living in a different place then he can only be on the car insurance policy as additional insured. As a general rule of thumb, the person keeping the car insurance policy should be the named individual for the title.
  • Either of the two people, who are insured, have to get a new car insurance policy. The primary reason to mention this point is to ensure that there isn’t a gap and you are without insurance. Get a new policy before removing your name from the existing plan.

To sum it up, unless and until, you divorce is officially final on paper, do not initiate the process of removing ones name from the jointly held car insurance policy.

 

Indirect Impact Of Divorce On Car Insurance Rates Due To Credit Score

Divorce proceedings result in rather cumbersome financial proceedings which have a direct impact on your credit score. If you hold financial commitments jointly then it’s you who needs to decide if you wish to remove one name from the account completely. Why would you do that? Reason being, after divorce, generally people tend to become unwilling to pay for any jointly held financial obligations. Your divorce does not change your contract with the lender in any way. If one of the account holders do not pay then it will affect the credit score of both the individuals.  Hence to avoid such vindictive behavior in the future you may want to separate each others name from the account. Auto insurance policy can be considered as an example of one area where such problems could arise. If the separating couple does not determine the responsibility of auto insurance payments then credit score will be affected.

 

Before Finalizing On A Divorce, Revisit Your Insurance Needs

  1. If you are the one who wish to keep the car insurance policy after divorce then by just calling in your auto insurance provider you can remove your ex-partners name. This will not be a hassle.
  2. Once the divorce is finalized, the financial situation changes for both the individuals. You may want to look at your coverage limits and deductibles and alter based on your individual requirements. The primary objective is to obtain the cheapest car insurance plan, however it might not be the right plan to suffice your coverage needs. Compare plans to get to the bigger picture and then decide.
  3. There are certain discounts which are only applicable to couples which might not be valid anymore and you may lose them. Like multi car and homeowners discounts.  On the contrary you may become eligible for some new ones. So your car insurance rates might be increased slightly depending on your individual requirements.
  4. If you are completely moving out to a new zip code after divorce then also you might see a change in your car insurance rates which would depend on your new area. Updating your new garaging address with the insurer is a must. Also update the commuting distance with car insurer.
  5. If you have children who are able to drive legally at the time of your divorce, then their name should be included in the car insurance policy of the legal guardian. If the couple has joint custody then children should be listed at the address where they will reside. Children can be listed on both the individual car insurance policies if you wish to.
  6. Another slightly complicated option is to stay in a group policy along with your ex. Before opting for this, consult an car insurance agent for complete details.

In the current world you would find many car insurance companies utilizing quite a number of factors to decide on car insurance premiums except marital status. So an individual’s conditions in terms of obtaining car insurance before and after divorce would more or less remain the same.

Image Courtesy: jcoterhals

 

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