Divorce is never easy for anyone involved. Unfortunately, divorce is also relatively common. There were more than 2.1 million marriages and more than 782,000 divorces in 2018, which is a divorce rate of about 36%.
As divorced couples go on to build new lives, it is important to take care of any jointly-owned insurances, contracts, or property. Your homeowners insurance policy is just one of the things you’ll need to figure out. Knowing how to make changes and what changes to make can ease the stress in an already uncomfortable situation.
- The homeowners insurance policy should be in the name of the spouse who remains in the home after the divorce.
- The divorcee who moves out and purchases or rents a new home will need to get a separate homeowners or renters insurance policy.
- When you make changes to the policy, it’s important to make sure the coverage amount and policy options are the right fit for your home.
How Do You Update Your Homeowners Policy After the Divorce?
Only those listed on a homeowners insurance policy are allowed to make changes to the policy. If you’re listed on your policy, you can request a change, also known as a policy endorsement, by contacting your insurance company or agent and making a formal request.
Some insurers allow you to request a change to your policy by logging in to your account online or by calling the company and speaking to an agent directly. You may be required to provide documentation to confirm the change. Also, the insurance company or insurance agent needs agreement from everyone listed on the policy to make a change to the policy.
When you request to remove you or your spouse’s name from the homeowners policy, the change may take some time to kick in. The effective date of the change will depend on the terms and conditions of your policy. Make sure you talk with your insurance agent or contact your insurance company directly to figure out how your policy terms affect the time frame.
Your policy covers those listed on the deed to the property. If one person moves out, the other will need to sign a quitclaim for the deed to be reissued in the name of the spouse who is staying in the home. Once you or your spouse file the quitclaim, the spouse who is no longer in the home can be removed from the homeowner’s policy.
Changing Coverages for Personal Property
In addition to removing the spouse who is moving out of the home from the policy, you may need to make changes to your contents coverage for items the departing spouse takes with them. For example, if your spouse leaves with half of the belongings in your home, you may be able to reduce the rate you pay because you have fewer personal property items to cover.
When you or your spouse move out of the home, it is important to tell your insurance company if the departing spouse takes any items from the home. The insurance company may need to add a special policy addendum called a "floater" for expensive personal items you haven’t insured before or remove a floater for items your spouse is taking with them.
If you look at your homeowners insurance policy declarations page, you can see how much you’re paying for each coverage you have. If you eliminate a special floater for items your spouse took with them when they left, your insurance premium may decrease by the amount of the charge for the item you removed from coverage.
When in doubt, you can receive a quote from your insurance agent for the cost of adding or removing items from your homeowners insurance policy before making the change.
It’s a good idea to create a personal inventory so you can make sure your policy covers your items. The Insurance Information Institute (III) offers a free web-based home inventory software app to help you take inventory of your belongings.
Each state has its own department of insurance with state-specific insurance rules, so check with your state’s department and your insurer for requirements unique to your state.
Will Your Home Insurance Rate Go Up?
Depending on what discounts you were receiving on your previous homeowners policy, your home insurance rate may go up. For instance, if you and your spouse had a multi-policy discount for a home and auto bundle, you could lose this discount if you purchase a new homeowners insurance policy and don’t bundle your auto again.
If you are removing or adding expensive items that are scheduled on the policy, the rate will go up or down depending on whether you added or removed items from the contents coverage of your policy.
Ways To Save on a Post-Divorce Homeowners Policy
If you were covered under your spouse’s homeowners insurance but you move out, you’re going to need your own policy. Doing a little research will help you find ways you can reduce your insurance premium. Here are some tips for saving on homeowners insurance to get you started:
- Consider a higher-deductible policy: Your initial premium will be lower, and if you do experience any claims, you will be paying a greater portion of the claim, which will make your loss history look better. A good loss history (the amount an insurance company must pay out in claims) over time will reduce your insurance premium.
- Purchase home security devices and burglar alarms: Some homeowners insurance companies offer discounts up to 20% for these devices to prevent theft and the resulting claims.
- Purchase a CLUE report before buying your home: The CLUE report stands for Comprehensive Loss Underwriting Exchange and will give you a history of the prior losses for a home. It could reveal any potential hidden damages to a home such as water damage, mold issues, or fire damage.
- Buy your auto and home insurance from the same company: This will entitle you to a multi-policy or bundle discount with most insurance companies.
- Check your credit score: Divorce sometimes impacts a person’s credit rating and the credit score is sometimes used in determining insurance rates. If you have joint accounts with a spouse, any missed or late payments will also show up on your credit report until the account is closed or your name is removed. This could impact your credit score. You can check your credit score, plus see any accounts you’re listed on, at one of several free credit score websites.
The Bottom Line
If you are thinking of separating or divorcing from your spouse, take some time now to research what changes are necessary for your homeowners insurance. It could save you time and money in the long run. Be sure to check with your insurance agent for professional advice before purchasing a new homeowners policy. They can help you maximize the discounts you are qualified to receive.