The change from married to single status after a divorce can be a financially jarring one for many people. No longer sharing the expense of a home has a big financial impact. Another area where newly-divorced people often get hit in the pocketbook is auto insurance.
There are several reasons why car insurance can be costlier if you’re single:
— Many insurance companies offer discounted policies for multiple cars. If you’re insuring just one car after divorce, you’ll likely be paying more than half the premiums on your previous policy.
— Insurers usually charge single people higher rates than married ones. That’s because they generally have fewer claims.
— Since many people sell the family home when they divorce, they may no longer have that opportunity to “bundle” their homeowners and auto policies for lower rates.
There are things that you can do after your divorce to help keep your auto insurance premiums from going through the roof. If your insurer can’t offer you a rate that’s within your budget, shop around for the best policy and rates given your new circumstances.
You may also want to consider getting a policy with lower limits and/or a higher deductible. Just be sure you can cover the deductible if you need to.
Remember that many companies offer renters and condo insurance. Therefore, you may still be able to bundle multiple policies if you downsize to a smaller home, even if you’re renting.
If you’ve moved closer to your workplace, that can lower the amount of driving you do every year. Therefore, your premiums may drop.
If you’re staying with the same insurer, make sure that your policy lists only you and only the vehicle(s) you are keeping. You don’t want to be saddled with insuring your ex’s car or paying for his/her poor driving record.
If you have a teen driver who’s not living with you or driving your car, you don’t need to list that child on your policy. However, if your teen may be driving both your and your ex’s cars, that teen will likely need to be on both policies.
If you’re concerned that paying for auto insurance after your divorce may be a problem, let your family law attorney know so that this can be factored in to any spousal support agreement or other part of the divorce settlement.
Source: NerdWallet, “How to Find the Best Auto Insurance Rates After Divorce,” Aubrey Cohen, accessed July 20, 2015