The stress of divorce can often lead people to do irrational and unpredictable things, especially when emotions are running high. Spouses may try to punish their former spouses by restricting time spent with children or by fighting for control of certain assets. Sometimes, though, spouses, will go to extreme lengths to get revenge, including violating terms of shared insurance.
While insurance revenge may not sound extreme, it absolutely can be. It can also have very destructive outcomes for victims. Insurance revenge between spouses is so serious that several states have laws specifically outlawing the practice.
What is insurance revenge? Simply put, it’s when a former spouse uses their knowledge and access to the other spouse’s property or insurance policies to inflict damage. Insurance revenge could cause financial loss, but it could also lead to property damage and even physical harm.
Insurance revenge is possible with a wide variety of insurance policies.
If a former spouse has access to the other spouse’s property, he or she could enter and fake some kind of accident. It could be even more damaging if the homeowner had already made a claim for that specific type of damage. For example, one insurance agent discussed an incident where an ex-husband used his key to go into his ex-wife’s home and put a nail into the home’s pipes. When enough pressure built up in the pipe, the nail popped out and water flooded the home. The incident was particularly bad because the wife had already filed one flooding claim. When it came time to renew her policy, the insurance company dropped her. She suffered property damage, but also had to shop for new insurance, possibly at higher rates.
A spouse who was still on the title for a car could take the plates and registration from the car without the other spouse’s knowledge. He or she could then turn the plates in and file the car as no longer being used. The insurance company would drop coverage and the other spouse likely wouldn’t be protected if subsequently involved in an accident.
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Keeping health insurance coverage is usually an important point in divorce negotiations. If one spouse isn’t employed, he or she may need to stay on the other spouse’s policy. However, if that condition isn’t written into the divorce order, there may be nothing to keep the policyholder from dropping the other spouse. In fact, the spouse may not learn that he or she was dropped until medical care is actually needed.
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In many divorces, one spouse is required to pay the other child support and maybe even alimony. If the paying spouse were to pass away, the recipient may need life insurance compensation to continue raising the children in a financially stable environment. However, the paying spouse may choose to cancel the life insurance policy or change the beneficiary to someone other than the children or the former spouse. That could put the custodial parent in a precarious financial situation.
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Dealing With Insurance Revenge
There are a few things an individual can do to protect themselves from insurance revenge. First, anything involving shared insurance should be written into the divorce decree. That will prevent a spouse from dropping coverage or changing a beneficiary. Also, it may be advisable to change locks and security codes on real property after a divorce. That will prevent the former spouse from entering the property and causing damage that could impact existing insurance policies. While it may not be pleasant to think that one’s spouse could inflict such damage, these types of incidents unfortunately do happen.