When a husband and wife get divorced and decide who will keep the house, the cars and the valuables, one shared resource often overlooked is insurance.
Most married couples have joint insurance policies, and they need to be divided along with everything else in a divorce settlement.
Resolving your insurance situation in a divorce is extremely important because of the potential liabilities and financial repercussions involved. If you and your ex-spouse were like most couples and shared home, auto, life and/or health insurance coverage while you were married, you’ll each need respective individual policies after you split up.
Auto insurance post-divorce
For example, if you and your ex-spouse owned cars and auto-insurance policies together, the insurance coverage has to be reassigned to reflect the post-divorce ownership of each car.
Sometimes there’s a lag in the policy transferring process, which means one driver can suddenly be uninsured and not even know it. That’s both dangerous and illegal in many states.
When you arrange for separate insurance coverage, it’s advisable to keep the joint policy active until you’re certain the individual policies have taken effect. If you have teenage children, you also need to decide whose policy will cover them, and in which cars.
Protect your assets and equity
If you and your ex-spouse owned a home (or multiple homes) together, you also need to readjust that coverage after getting divorced — particularly if one of you keeps the house.
Suppose your wife has moved out, and then your house gets leveled by a storm: Do you want her to be eligible for half of your insurance settlement while you need to rebuild?
Most homeowners insurance policies protects a couple’s jointly held valuables, so when you and your ex divide possessions, your new policy should reflect only the items that each of you has taken.
Life and health insurance coverage
In many divorce cases, one of the stickiest issues of all may be health insurance, especially if one spouse was covered by the other partner’s insurance through his or her workplace. In those cases, a COBRA policy can provide continued insurance coverage, but it is temporary.
If part of your healthcare challenge is a pre-existing medical condition, your options will be affected when you change insurance plans. Some divorce settlements are written to include financial support for an ex-spouse’s and children’s longer-term health insurance. If you’re concerned about how health coverage works after a divorce, be sure to discuss it with your attorney.
You should also review any life insurance policies, especially if your ex-wife had been named as the beneficiary. On the other hand, if you want her to receive your death benefit with the goal of passing it on to your children, you can redo the policy to put any insurance payments directly into a trust fund for your kids.
Discuss your options with divorce professionals
An important point to remember is that a joint insurance policy is a legal contract, and you can’t simply remove your ex-wife from it without her consent.
Talk to an experienced men’s divorce attorney and your insurance agents to help you set up new coverage and protection for the post-marital stages of your life, because it could make a huge difference later.
