Will my Auto Insurance Rates Increase When I Divorce?

Many factors affect auto insurance rates, and while getting a divorce will not directly affect one’s rates, if divorce results in the removal of one’s spouse from the auto insurance policy, that will usually change your rates in some way.

Your auto insurance rates could increase or decrease after divorce, but they will likely not remain the same.

Wouldn’t it better, then, just to say divorce will affect auto insurance rates, even if not directly? Not necessarily. Many people assume that once a divorce is finalized, or even when it’s first on the table, that removing a spouse from an auto insurance policy is as simple as making a phone call to their agent.

Not so fast.

One spouse is not able to remove the other without their consent. In other words, the consent of both is required before either spouse can be removed from the policy.

Why is the consent of both parties required?

In most states, auto insurance is a legal necessity for operating a motor vehicle, so states are understandably reluctant to allow someone other than the insured individual to remove them from this often mandatory coverage. Additionally, most insurance companies require anyone named on the title of the insured vehicle to be listed on the insurance policy.

So, if both you and your spouse are listed on the title, then even if both of you consent to the removal of one spouse, there may still be hoops to jump through with the insurance company (providing proof of other insurance coverage, for example). And then, of course, there are issues related to the splitting of finances and deciding who will pay for the auto insurance coverage, if combined, and if so, what portion.

Okay, so let’s say you have the consent of both parties, you sign the appropriate removal request forms required by the insurance company, and you follow your agent’s recommendations and procedures.

What next?

Typically, the spouse being removed from the policy will need to first obtain auto insurance coverage from another insurance provider — or even the same insurance company, but on a separate policy — before finalizing the removal. Some insurance companies might also require separate vehicle titles, separate addresses, and other important but sometimes frustrating administrative details.

Once each of you is finally on separate auto insurance policies, the question of the day remains:

How will my auto insurance rates change after divorce?

Well, you know how frustrating it can be to hear the standard answer of, “It depends” whenever you ask an attorney, financial planner, CPA, or insurance agent such questions? This is one of those times where a lot depends on your personal situation.

For example, if you have a spotless driving record and your spouse has had a few moving violations on their record, then removing them from your policy will likely have the effect of reducing your auto insurance rates quite a bit. If, however, the opposite is true, you might be in for a rate increase.

And then there are all the other related factors that play a part in determining auto insurance rates: things like multiple vehicle discounts, auto/home discounts, and safe driving discounts. Even things like changing your home address will have an effect on your rates. Children and teenage drivers also add an additional layer of complexity.

Some actionable takeaways for making what can be a difficult and stressful time less difficult and stressful include the following:

1. Attempt to work things out amicably. Of course, advice like this is well-intentioned but more difficult in practice than in theory. And yet, this is still great advice you should strive for as much as possible.

2. Don’t rush. Insurance agents hate it when couples seesaw between wanting to split up and wanting to stay together — and change their policy from one moment to the next based on these wild emotional swings. It’s natural that emotions will be high during a divorce, but take a step back and think hard before making any black-and-white financial, contractual, or policy decisions.

3. Shop around. The single biggest way that people in all circumstances end up overpaying for car insurance is due to resistance to shopping around and comparing rates from multiple companies, at least annually. Big life changes like divorce, as well as simply the passage of time, are great reasons to shop around and see how much you might be able to save.

There you have it. May this guide for post-divorce auto insurance give you the insight and information you need to not only save money but take a little bit of a load off your shoulders during this difficult process. Continue to do your homework and research your options for the smoothest path possible on your post-divorce journey.