When one makes the decision to get a divorce, that decision is the first step of many that will actually make the split official. There are decision regarding child custody, property division, alimony and more that can make moving on with one's life feel like the most difficult thing they've ever done.
There is one step of that starting over that lots of divorced parties forget about, which can affect them negatively and add stress to a time that should be exciting and promising. For various reasons, among the myriad of ties that need to be cut after a divorce is your car insurance.
For one, it is required by virtually every insurance carrier--no matter what type of policy--for rating and liability reasons. Insurance rates are not simply calculated on your driving history and personal information. A lot of how much you will pay in insurance premiums simply has to do with where you live.
With divorce usually comes a change of residence, and along with notifying your insurance company about your change in marital status, you will need to tell them about your new residence. Your rate may change based on the fact that you are no longer married, no longer have multiple policies with the same carrier, or have multiple vehicles insured under the same policy.
Besides being required by insurance companies, it's just a good idea to cut ties financially after a divorce. If you don't remove yourself from an ex-spouse's insurance policy, you will find yourself legally liable and financially responsible for any losses incurred, even after the divorce is legally finalized. If you're listed on an ex-spouses car title, you should take action to remove your name if the car is no longer in your possession.
The assumption is that splitting things up financially will create more costs for both parties. This is not necessarily true. It isn't as costly or frustrating as remaining financially obligated for whatever costs an ex-spouse might incur due to the fault of their own, as well as having an insurance claim outright denied for not notifying the carrier about your change in marital status.
Source: Fox Business, "Divorcing? Break the news to your car insurer, too," Penny Gusner, April 3, 2012