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Divorce complicates auto insurance

If a divorce isn’t bad enough, your personal auto insurance might be affected as a result, which helps keep things interesting.

I recently helped a couple, fresh from divorce, that has teenage children old enough to drive. Mom, dad and two kids each have a vehicle to drive. The divorce was final and both parents were under the impression that all of their creativity during the divorce proceedings generated a mutual and beneficial arrangement for their kids and the cars they drive. Dad kept his vehicle and the vehicles the kids were driving were in his personal name, while mom titled her car in her personal name. The kids were to live with mom.

Sounds simple enough, but when the questions started being asked — who was to be in charge of the insurance and under which policy the autos should be insured — things became interesting. If dad chose to keep the vehicles the kids are driving in his personal name, then Dad needs to insure the vehicles. Simple rule: If dad’s name is on the title, then dad needs to be absolutely sure that he is protected when the kids drive that vehicle. He cannot assume that just because the kids live with mom that she is responsible for the auto insurance. After all, she doesn’t own the vehicle. The autos the kids are driving will be insured under dad’s policy and dad will, no doubt, cringe over the fact that his policy will be rated-up for teenage drivers — not only on the two cars the kids drive but dad’s as well.

Follow so far? But we’re not finished. Though mom is left insuring her own vehicle, she too will have her auto policy rated upward, using the teenage kids as a rating factor since they live with mom. Remember the first auto insurance bill when your child turned 16? Ugh! Mom’s personal auto policy insures family members living in her household and those who could possibly have access to the family vehicle. Is it possible that junior or sis will use mom’s car if theirs is not available? Yep.

Here’s where it gets even better. What if mom uses one of the cars the kids drive? Careful, mom and dad. Mom’s auto policy is meant to insure her for the one auto scheduled on her policy, not the kid’s car. If mom gets in an “at-fault” accident with the kid’s car, dad may not be too happy when his policy is required to respond. And it’s not good for mom if dad has minimal limits or even worse, lets the auto insurance lapse. Her policy can be endorsed to cover this scenario, but all of the facts need to be given to her agent to make sure this is done correctly.

Don’t worry. You won’t be tested on this. All I ask is if this stirs up questions, then give your agent a call just like this couple did with me. Once they understood how things worked and the options they could consider, all worked out well.

Andy Gregory, co-owner and president of Des Champs & Gregory, Inc., has offices in Bradenton and Lakewood Ranch. He specializes in commercial property and casualty insurance as a certified insurance counselor. He can be reached at (941) 748-1812 or by e-mail at