Homeowners Insurance After a Divorce: The Easy-to-Miss Detail
Homeowners Insurance After a Divorce: The Easy-to-Miss Detail
After a divorce is final, it’s common to feel too drained to tackle every follow-up task. One item you don’t want to overlook: making sure the homeowners insurance lists the correct insured. If the policy’s named insured doesn’t match the current owner of the property, a future claim can be denied—and the cost can be huge.
Who should be on the policy?
When you apply, the applicant is the named insured. The other spouse might be:
specifically listed,
listed by name but not as the named insured, or
covered generally as a family member living in the home.
Insurers require an insurable interest to pay a claim. If you’re not on the deed or no longer living in the home and married to the named insured, you may not have that insurable interest.
Why this issue is popping up more often
Higher mortgage rates make refinancing harder, so divorcing couples don’t always make a clean break with the house. That creates risk if the deed, mortgage, and insurance aren’t updated together. Consider this common scenario:
Example: Bob owned the home before marriage. Later, Bob and Mary refinanced when rates were low and both names went on the mortgage, but the deed stayed in Bob’s name. Bob has always been the named insured on the homeowners policy, and Mary was covered only as a family member living in the home.
After divorce, Mary can afford to pay the existing mortgage and agrees to be legally responsible for it. She trades other assets—giving up Bob’s 401(k)—to keep the house. Bob quitclaims the property to Mary as required by the decree. The homeowners policy had just renewed right before the divorce, and Mary doesn’t change it. Three months later, a fire causes major damage. Mary files a claim and it’s denied because (1) Bob is still the named insured but no longer owns the home, and (2) Mary is no longer married to Bob, so that “family member” status no longer applies.
Update your coverage before (or at) settlement
Match the deed and policy: Make sure the named insured(s) on the homeowners policy mirror the current owner(s) on the deed.
Adjust after title changes: If one spouse receives the home (e.g., via quitclaim), update the policy immediately—don’t wait for the next renewal.
Coordinate with the mortgage: If the loan stays in place, confirm the correct mortgagee clause/loss payee and whether escrow will keep paying premiums.
Check who’s actually covered: Remove a former spouse who no longer lives there; add the owner who will reside there.
Review other policies too: Life and auto insurance often need beneficiary and ownership updates at the same time.
Get guidance so nothing slips through
Aligning the deed, mortgage, and insurance prevents painful surprises when you need coverage most. FMD Wealth Advisors can coordinate these details alongside your legal team so your protection matches your post-divorce reality. Book your Free - Assessment Call here.
Disclosures: FMD Wealth Advisors LLC (“FMD Wealth Advisors”) is a Registered Investment Adviser.
This material is for general information only and is not individualized legal or tax advice. Consult your attorney and CPA regarding legal and tax matters specific to your circumstances. This content is intended to provide general information about FMD Wealth Advisors. It is not intended to offer or deliver investment advice in any way. Information regarding investment services is provided solely to gain an understanding of our investment philosophy, our strategies and to be able to contact us for further information.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such. The views expressed in this commentary are subject to change based on market and other conditions. These documents may contain certain statements that may be deemed forward‐looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Any projections, market outlooks, or estimates are based upon certain assumptions and should not be construed as indicative of actual events that will occur.
Past performance is no guarantee of future returns.
Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable. Additional Important Disclosures may be found in the FMD Wealth Advisors Form ADV Part 2A. For a copy, please Click here.