Question: When a married couple gets divorced, do they have to report the divorce to the car insurance company? Also, does it change the rates they pay?
Answer: Yes, if you and your spouse have divorced you need to inform your car insurance company about this change in marital status and advise them of any changes that need to be made to your policy. State laws and policy terms vary, but typically you must inform your insurer within 30 days after your divorce is finalized.
Most companies offer a car insurance discount to married couples of 5 to 15 percent, so getting a divorce will likely raise your rates due to the loss of this discount. Also you may lose out on multi-car discounts (up to 25%) and multi-policy discounts (around 10%).
In general, insurance policies will cover only one household, the one where you and your vehicle reside, so you and your ex-spouse cannot keep one policy for the cars that both of you used to insure together when married and living together.
Your car insurance policy likely notes that your insurer needs to be notified of any changes that are made, such as if you have moved and are residing in a new location, because these are important rating factors.
If you fail to inform your car insurance company of the divorce and changes of garaging location for the insured cars, it may be possible for your car insurance policy to be canceled out and claims could be denied if they occurred after the unreported divorce and related changes.
If you and your ex still have your names on each other’s cars, then you should see about getting your name off of the car you no longer have (talk to your divorce attorney) so that you won’t need to be listed on your ex-spouse’s policy in any capacity and so that you won’t have the vicarious liability that comes along with being a co-owner of a car.
Vicarious liability in part means that you can be held responsible for how a car is used, even if you are not the one driving it. If your ex-spouse were in an accident and either didn’t have insurance or his auto insurance limits where exceeded, then both of you could be held personally responsible.
Also, if your ex-spouse takes insurance off of a car that still has your name on it, then the state could give both of you penalties for a lapse in car insurance coverage.
Inform your car insurance company of your divorce and what changes have taken place to get a quote on a policy for your new needs. Then comparison shop to make certain you are getting the best car insurance rates.