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Will your insurance costs go up after a divorce?

On Behalf of | Jun 22, 2023 | Divorce

A divorce can bring significant changes in various aspects of one’s life, including insurance. Understanding how a divorce might impact insurance is critical to help manage expenses during this challenging time.

Insurance, particularly auto and health, can see changes due to a shift in household status, driving records and health coverage. While it is not a given that rates will increase, certain circumstances can lead to a higher premium.

Effect on auto insurance

According to US News & World Report, consumers pay an average of $1,741 each year for car insurance in Kentucky. Many factors influence the cost of auto insurance including age and driving history. Similarly, a change in the policyholder’s marital status can affect rates. After a divorce, individuals will need to establish separate auto insurance policies. Insurers sometimes offer lower rates to married couples as they tend to file fewer claims. So, transitioning from a joint policy to a single policy can lead to an increase in rates.

The loss of multi-car discounts can also affect auto insurance rates. Most insurance companies provide discounts to policyholders who insure more than one vehicle under the same policy. After a divorce, individuals might lose these discounts.

Impact on health insurance

Divorce can also impact health insurance coverage and costs. If one spouse was previously covered under the other’s health insurance plan, they might need to find new coverage. Depending on the new plan chosen, this could lead to higher premiums. Also, certain insurance companies might charge more for single policyholders compared to those with family policies.

Mitigating factors

While divorce can lead to increased insurance costs, certain factors can mitigate this impact. For instance, a clean driving record can help keep auto insurance rates low. Shopping around for different insurance providers can help find the most affordable rates. Government programs and employer-sponsored health insurance plans can offer affordable health insurance options for those recently divorced.

While a Kentucky divorce can lead to increased insurance rates, this is not always the case. Remember to inform insurance providers promptly about the change in marital status to avoid complications in future claims.