Divorce always changes the financial landscape of people's lives. Whether the parties are financially independent or not, there is a marked difference between combined income households and single income families. It is always cheaper to live together than to manage two different homes. In every divorce, property is divided and financial responsibilities increase in a number of ways.
If, for example, the family could previously get along very well with one vehicle when everyone lived in the same house, they will likely need two vehicles after the divorce. This could mean two separate and altogether unconnected policies, depending upon the terms of the divorce and the quality of relationships required after it takes effect. In any case, if the terms of the divorce settlement demand that the automobile insurance policy be maintained to cover the new household, there still remains the fact of an additional address, which will bring an increase in premium.
Parties to the divorce will either be paying or receiving financial settlements such as alimony and child support payments, both of which affect the financial standing of each party. For the person paying the settlements, there could result financial hardship enough to seriously affect credit ratings. The credit status of the person receiving divorce payments does not, however, automatically improve as a result. The credit scores of that person, too, could be negatively affected by divorce because personal expenses increase and budget balances shift greatly.
Insurance companies often conduct credit checks on their prospective customers, especially for first auto policies. When a divorce occurs and automobile insurance must be negotiated or renegotiated, the carrier could choose to conduct a credit check even on the policyholder with whom there is already a relationship. For credit rating purposes, the division of property reduces the financial standing of both parties since many personal finance operations that use combined family or household income as a determinant of a person's financial viability.
The cash that either party could recuperate from selling the family home is not as valuable to creditors and insurance companies as the home itself was even if it was jointly owned. However, if the home is adjudicated to one person by a court, it will not necessarily increase that person's financial standing because it might carry with it a long and substantial mortgage. So whereas owning the home could have been an asset for the couple, it could become a considerable liability for the single owner.
By the same token, a rise in financial responsibilities as a result of having to pay alimony and child support could be interpreted as a serious enough liability to warrant a lower credit score, even if that person retains possession of valuable property such as a house. The person receiving the payments now has rent payments or a new mortgage plus every day living expenses responsibility for any children, which increases the financial liabilities, so there is no increase in credit status corresponding to the ostensible increase in income.
Sometimes, the parties to a divorce succeed in maintaining amicable relations and matters such as automobile insurance are settled satisfactorily. Generally speaking, a family's car insurance needs are often increased rather than lessened by divorce, especially when children are involved. At the same time, the deterioration in credit status that often occurs on both sides could make motor vehicle insurance more expensive than previously for both parties. Steps that could be taken to counteract this would include maintaining insurance protections as part of negotiated settlement, conducting a detailed assessment of one's financial position, then meeting with a trusted insurance agent.