This blog is usually written to family law attorneys. But, this post is more broad. Attorneys, divorced/divorcing homeowners, financial planners and more can benefit from this simple information.
I was quite surprised. I’d never paid close attention to insurance. My field is mortgage financing for divorcing home owners and buyers. I just had good agents in my data base and generally let my customers bump along with whatever insurance company they had when they refinanced. I dislike interfering with other people’s business. I don’t want insurance agents out there telling my customers “hey, you ought to give my 3rd cousins’ hair-stylist’s uncle’s mechanic’s brother’s new daughter-in-law a call – she just became a loan officer and I’m sure she’d do you real good.”
But, I learned something yesterday that set me thinking about my divorce customers. Did you know that certain insurance carriers raise your premiums on car or homeowner’s insurance when you get divorced? Not all of them. But, some of them.
They don’t say it that way. They say we give a discount for being married. But, it’s the same. You pay higher premiums to them than if you were married.
I’m not saying that it’s unfair. On the other hand, I believe that it’s quite fair for an insurance company to set their premiums and coverage based on what they determine are the risks and rewards in order to make a profit. I’m all for that. But, not all companies have the same “marriage bonus” or “divorce penalty;” and, not all companies have it to the same degree if they do have it.
And, let’s be fair-minded concerning insurance companies. There are innumerable factors in how they have to measure their cost of taking YOUR risk. That’s what insurance is, after all – you (the purchaser of the insurance) offloading your risk onto a firm which, for a price, assumes that risk.
So, when you finalize your divorce, if you keep the house and perhaps buy out your ex-spouse’s interest (with an incredible refinance loan with me), your insurance may not change until the next renewal period. (Sometimes they might change it immediately but that’s more rare). So, you may never know exactly why the premium increases unless you drill down and go over the details of your policy. I don’t know about you but I’d rather get smacked in the head than spend even 5 minutes talking about the nuances and details of insurance policies. It’s brutal.
Here’s what you should do:
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In my experience, insurance seems to be an industry that is filled with some pretty good and decent people. They’re knowledgeable, they genuinely care about educating customers and potential customers, they are responsive. We as consumers need to get better at asking the right questions.