A close friend and client called me a few weeks ago requesting renters insurance for an apartment she’s moving into. She and her husband are separating as they determine whether or not to end their marriage and file for divorce or go through the long process of healing. They may or may not resolve their issues in the coming weeks or months which led me, as their agent, to take a few minutes and outline the insurance decisions they need to address should they decide to divorce. Let’s take a look at the three areas anyone going through a divorce should consider.
Home Insurance: When either spouse moves out of the home, a renter’s policy should be obtained for the rented home or apartment during the separation. This provides coverage for the personal property or contents within the rented home as well as liability coverage should someone sue for negligence.
I recommend both spouses remain on the primary home policy as named insureds until a final divorce decree is issued. Once the decree is issued, it will specify who is to become the owner and live in the home, or if it will be sold and the proceeds divided between the former spouses. For instance, if the home is refinanced in the wife’s name, the husband will be removed from the home insurance policy as a primary or joint primary insured. Should both people retain ownership of the home, the spouse who’s moved out may remain on the policy as an additional insured.
It’s important to remember, Texas law states that in order to have an insurable interest in the property, both people must both retain joint ownership. If there is no joint ownership then the policy is written only in the name of the person who lives in and owns the home.
Car Insurance: Typically, both spouses have their own vehicle. If the divorce is proceeding amicably, I see no reason to split out the car insurance until a final decree is issued. This allows both spouses to benefit from a lower rate due to the multi-vehicle discount. Once the decree is issued, separate policies are then issued for each spouse based on where they live.
When there are teenage drivers and vehicles, the custody arrangements help determine whose policy the drivers and their vehicles are placed on. If one parent has primary custody, I typically recommend placing the drivers and vehicles on that parent’s policy since that is their primary home. In the event of joint custody with equal time at both parent’s homes, then I depend largely on what the parents want. In one case, I’ve placed one teen driver and vehicle on one parent’s policy and their sibling and vehicle on the other parent’s policy.
Life Insurance: It is pretty common for the court to determine the parent paying child support to require they maintain a life insurance policy of a specified amount until the last child reaches the age where child support is no longer required. I’ve helped clients secure a life insurance policy in these instances, but I do recommend both parents have them to fully protect the financial interests of the children.
Divorce is a painful ending regardless of the reasons why or who’s at fault. It’s important as an agent and personal insurance advisor to not take sides but serve the interests of both people and their kids. That takes some extra communication on my part, but having been through a divorce, I believe it’s important. Do you have a question, comment, or experience you’d like to share? Share them with me on my Facebook, Google +, or LinkedIn pages. I’d love to hear from you.