Posted by LLOYD J CAZES CPA

Insurance Issues You Must Consider In a Divorce

Insurance Issues You Must Consider In a Divorce

It is improbable that either of the party will have time to think about the insurance issues there will be when there is a dissolution of their marriage with all the raw emotions and stress that accompanies the divorce process. But a lot of times one spouse will be left with a lot of unexpected questions and no one to turn for answers since they will lose their insurance advisor in the process of divorce. While showing concern and respect to both of the divorcing individuals and their privacy, it’s imperative to find a specialist who will effectively address these complex needs rather than trying to explore the insurance process on their own. 


For both divorcing parties and their attorneys, below are some insurance-related considerations:


Purchasing life and/or disability insurance will be asked to the spouse paying child support or alimony. This will be done in case they cannot fulfil their obligation due to the event that they pass away or are disabled. Taking into consideration the amount of coverage needed, the health of the individual, and the time frame of the commitment, there are reasonable and creative priced vehicles for addressing this concern. 


A new insurance designation may be required for the party moving out of the marital home. If the house will be lived in by only one until the marital home is sold or the divorce is settled and the both own it, then this is true. The person listed on the policy plus all resident relatives is what an “insured” means by definition. They should be added as an “additional insured” and removed as a “named insured” since the party who left is no longer a resident but still has ownership. This will ensure that they recoup financially in the event of the loss of the home or its contents and also this will provide them protection against any potential lawsuits involving the property. All copies of all policy documents will be received by the additional insured at their own address. 


One of the enormous pain points in a divorce and are often part of an insurance program are collections. Determining the value of a collection of wine, art, jewelry, or cars and deciding how it should be divided can take a lot of time and resources. It is possible that with the insurance agent and company there is a comprehensive list of items and appraisals on file if the collection is insured. In tracking down the appropriate professionals who can help determine the correct value, your insurance agent can be a very great help. 


There is a high chance the vehicle policy will be altered. Either by rewriting the policy together or removing one of the insureds and his or her vehicle(s), changes to the policy should be made especially if all the parties’ vehicles are insured under one auto insurance policy. They should have their own insurance coverage on their vehicle in their new location once they live elsewhere and their car is garaged in another place. However, when they have a new policy in place, then that is the time they should be removed from the current policy. Additionally, where teen children spend the majority of their time and/or where the cars they drive are kept is where they should be included in the policy. In the divorce discussion between the parties and their attorneys, the vehicles and the cost of insuring teen drivers should be part of it. Setting this one out will prevent future problems. 


Personal insurance is what the party who leaves the marital home will be concerned about.  In order to protect and defend themselves in case of a personal lawsuit and to protect the contents of the residence a tenant policy is important in the case, they are renting an apartment. They can consider an umbrella or excess liability policy. 


The policies mentioned above represent some of the concerns that will be there in a divorce. The most important part is for the both parties and the family to address the needs and problems while showing consideration and sensitivity, it is very important to have an experienced professional on hand to address and settle those concerns.


LLOYD J CAZES CPA
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