Car insurance after divorce

Getting a divorce not only affects your personal life, but it can also impact your auto insurance. Statistics Canada reports that the divorce rate was approximately 38% as of 2024, suggesting that many Canadians are navigating new legal and financial uncertainties after their separations. From joint insurance policies with your former partner to shared vehicles and multi-car insurance discounts, all of these can come into question once you get a divorce, making things already more complicated than they already are.

To ensure you're properly protected on and off the road, understanding your insurance obligations and legal rights is essential. In this guide, we'll walk you through what you can expect and how to manage your car insurance during and after your divorce.

What happens to your joint auto insurance policies after you get divorced?

If you and your ex-spouse shared a car insurance policy before your divorce, you will need to inform your insurance company immediately to update your coverage accordingly. Most insurance providers in Canada require that those under the same insurance policies must be living in the same household to be covered under one plan. Therefore, once either you or your ex-spouse moves to a different address, you'll need to be covered under a different car insurance plan that reflects your new address. Cancelling your shared policy is fairly easy. What you'll need to do is:

1. Determine who stays on the insurance policy

Before speaking with your provider, you'll need to determine who is remaining on the auto insurance plan. Typically, it depends on who the owner of the vehicle is. If you both have ownership of the car, your insurer may require that ownership be legally stated before moving forward. Nonetheless, when one spouse is the registered owner, the other will likely be removed from the policy.

2. Contact your insurance company

Once you've determined ownership of the car, you can go ahead and contact your insurance company. Inform them that you wish to update your insurance policies now that you are divorcing. Depending on your situation, they will advise you whether it’s better to start a new individual policy or transfer an existing one.

It's important to note that if you do end up cancelling your insurance policies, you may be subject to a cancellation fee. Regardless, failing to notify your insurer could lead to claim denials or coverage lapses.

The Legalities: ownership and registration in Canada

As we briefly touched on, vehicle ownership plays a key role in how car insurance is managed post-divorce. In Canada, a policyholder must be the legal owner of the vehicle they are insuring. Here's an example of what you'll need in two of Canada's provinces:

• British Columbia: You can transfer vehicle ownership to your ex-spouse without paying provincial PST if the transfer is due to the termination of your marriage or the ending of a common-law separation.

• Ontario: To avoid provincial tax when transferring a vehicle between two individuals, you'll need a completed sworn statement of the transfer, a separation agreement, a divorce agreement, or another similar court document.

Don't forget about your driver's licence

If you're selling your shared property and moving to a new one, you'll need to update your driver's licence as well to match your insurance papers and vehicle registration. Failing to notify your insurer can lead to claim denials and the cancellation of your policy altogether.

Impact on premiums and coverage

From a rise in auto thefts to inflation and more expensive repair and replacement costs, car insurance premiums are on the rise in Canada. If you're recently divorced, you likely have questions about how your new marital status will impact your finances and your premiums. The following aspects of your insurance—premiums and coverage—may be impacted by divorce:

Discounts

For starters, if you and your former partner had a multi-car insurance discount with your insurer, you'll likely lose the 15% discount you originally received. Similarly, if you and your soon-to-be ex bundle your home insurance, life insurance policies, renters insurance, and other policies with the same company, you can anticipate losing your bundle discount as well, unless you change existing policies to reflect your new situation.

At the same time, if a former spouse had a clean driving record that helped lower their premium, the other may experience higher premiums when they finally purchase their own policy. Ultimately, if you want to save money on your new policy, ask your insurer whether there are other discounts you may qualify for. For example, if you've been with the same provider for numerous years, you may qualify for a loyalty discount. You can also save money on your premiums by installing security features and winter tires on your vehicle.

Other financial considerations

Divorce can also impact your financial decisions moving forward, which can affect your insurance costs. For example, in provinces like New Brunswick and Nova Scotia, insurance providers can consider your credit scores when deciding your rates. If you’ve taken on new financial burdens, this may negatively affect your premiums.

Statistically speaking, women with good driving records experience slightly lower insurance premiums than men, saving around 5% in costs due to them being a lower risk to insure. However, it's important to note that insurance companies are not allowed to use your relationship status when calculating your rates, so you won't need to worry too much about your premium changing based on your new status. To protect yourself and your assets, request quotes from multiple insurers and ask your current provider if you qualify for any other savings on your premium.

Rebuilding your insurance profile

Starting fresh after a divorce often means rebuilding your insurance profile as a customer. Fortunately, you won't have to start a brand-new insurance history once you're divorced, as insurance providers view insurance histories as a continuous profile over the years. Therefore, if you want to save on your insurance coverage moving forward, here's what you need to do:

Pay for your New Policy Upfront

To avoid surcharges on your insurance, consider paying for your coverage upfront, rather than monthly. This can cut anywhere between 3% to 5% off of each monthly payment.

Increase your deductible

A higher deductible means a lower insurance premium in most cases. If you can afford to do so, consider increasing your deductible amount to save on your monthly insurance payments.

Maintain a clean driving Record

The best way to keep money in your pocket is to maintain a clean driving record. Follow the rules of the road and avoid traffic tickets.

Review your insurance decisions

Lastly, consider what kind of coverage you need and how you'll be using your car in the future. For example, if you have joint custody with your ex-spouse, you'll likely spend more time on the road by driving your children to drop-offs. In this case, you'll probably want to keep your coverage limits high.

In contrast, if you have full custody of your children and won't be driving as much as before, you may want to consider telematics insurance to save money on payments, while also ensuring you are properly covered.

Bundle your new home insurance, life insurance, & other policies

If you have other policies like renters' insurance, consider bundling your coverage with your new car insurance plan. Again, doing so can save you up to 20% on your premiums.

Remember, while divorce can be challenging, your insurance doesn’t have to be. By proactively managing your risk profile, you can reduce your premiums without sacrificing how well you're covered.

Can I remove my spouse from my current policy before the divorce is finalized?

If you share coverage with your spouse and you want to remove them from your car insurance before your divorce is finalized, you'll need to get their consent before doing so. You cannot legally remove them without it, seeing as they are also considered policyholders.

How BrokerLink can help

Navigating the transition of divorce can be overwhelming, especially when it comes to ensuring your interests and assets are covered by insurance.

This is where BrokerLink can help. Our experienced brokers can help walk you through your previous coverage and help you purchase new insurance based on your needs and budget. We've got access to top policies from leading insurance companies in Canada, allowing us to shop around on your behalf, unlock discounts, and ensure you feel confident in your full coverage.

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