How insurance coverage changes with divorce

On Behalf of | Jun 27, 2022 | Uncategorized |

California couples who are going through divorce are worried about lots of things, not just how it will affect their finances but how it is impacting the rest of the family. The strong emotions that drive the decision to end a marriage often cause people to overlook important concerns, such as insurance coverages, until too late.

For residents of Long Beach and throughout Los Angeles County, setting aside the hurt to focus on important practical considerations is important for their future security. It can help to have compassionate legal assistance during the process to assist with critical financial issues that may arise.

Property division in California

The legal theory of community property guides California property division laws in a divorce. A couple will create an inventory of all property and debt they have and characterize it as either community property, which is everything either or both own, owe, or purchased during the marriage, or separate property, which is all that they brought into the marriage. Community property can include:

  • A home or car
  • Furnishings
  • Income
  • Retirement accounts
  • Mortgages or other debt

The two parties may then keep their separate property and divide the community property equally. This may mean having to liquidate some assets to satisfy a court order or coming up with a separate agreement on their own that will need approval.

Including insurance coverages in property division

The couple will have to include insurance policies in their discussions about property division, not only when changing beneficiary designations but also when deciding in whose name some policies will continue. Some of these insurance policies include:

  • Home: When one or both parties change addresses, they will need to get a new homeowner or renter policy that reflects the assets they will take with them from the divorce. If one spouse remains in the home, they will also have to go through this process, and may want to make security modifications to reflect their new status.
  • Auto: Transferring title to one spouse will require changes to the insurance coverage as well, which may also reflect a change of address.
  • Health: Unless each spouse has a separate policy and there are no dependents, the spouse who was on the other’s policy may not have a continuance without negotiating this during the divorce proceeding. COBRA benefits are possible for up to 18 months, but it is important to calculate this additional cost and who will pay for it.

Beyond these important coverages, divorcing couples should also be sure to change beneficiary designations on financial and estate planning documents they may have, such as life insurance, a will, or a trust.

If a spouse relies on disability insurance, they should own the policy while considering the costs of premiums. Similar discussions must happen for a child currently on disability insurance. Premiums on long-term care policies also have a cost and value to consider during negotiations.