Divorce attorneys, insurance agents, and property insurance adjusters need to appreciate that separation and divorce may have an impact on the right to recover insurance proceeds. A recent federal court decision discusses how marital separation can silently void vital insurance protections. 1 The factual scenario may seem unusual on the surface, but the legal logic applied reveals a ticking time bomb embedded in many standard homeowner policies. And given that nearly half of all marriages in the United States ultimately end in divorce, this is not a fringe concern. This scenario is a mainstream risk that demands proactive attention as soon as separation and divorce is initiated.
Tammie Austin was married to James Moore and shared a home with him in Kentucky. Though they bought the home together in 2018, the deed named only Moore. He alone was listed as the “Named Insured” on their State Farm homeowner’s policy. Moore later relapsed into drug use and became physically abusive.
Austin left the home in 2020, sought safety with her daughter, and filed for divorce, though the divorce was never finalized. In 2022, Moore tragically set fire to the house and took his own life. Austin filed a claim for loss of the home and her remaining personal property. State Farm denied the claim.
Although she was Moore’s spouse, Austin was not living in the home at the time of the fire. The policy language was found to be unambiguous on this point. According to the State Farm policy:
‘You’ and ‘your’ mean the person or persons shown as ‘Named Insured’ in the Declarations. If a ‘Named Insured’ shown in the Declarations is a human being, then ‘you’ and ‘your’ include:
(a) a spouse of a ‘Named Insured’;
(b) a party to a civil union with a ‘Named Insured’;
(c) a domestic partner of a named ‘Named Insured’; or
(d) a person in a substantially similar legal relationship with a ‘Named Insured’;
if such relationship is recognized and valid in the state where, and at the time when, the legal relationship was established, so long as the person in the above relationship resides primarily with that ‘Named Insured.’
This single clause that the spouse must “reside primarily with the Named Insured,” was determinative. Because Austin had moved out nearly two years earlier, the court concluded she was not an “insured” under the policy. No ambiguity. No coverage. Her breach of contract claim was dismissed, along with her argument that State Farm had violated Kentucky’s public policy protections for domestic violence victims.
This case delivers an urgent message for family law and divorce attorneys. Insurance status can silently evaporate when one spouse leaves the marital home. The spouse who leaves, whether to initiate a divorce, seek safety from abuse, or merely establish independence, may also unknowingly exit the legal protections of the insurance policy. If a disaster occurs after separation but before the divorce is finalized or the policy is modified, the departing spouse may be left without any coverage.
This legal minefield isn’t limited to divorce lawyers. Insurance agents must counsel clients undergoing marital transitions to re-examine all policies, not just health and auto, but also homeowners and umbrella coverage. A new named insured designation, an endorsement, or even separate coverage may be required to protect the non-occupant spouse’s interests. Similarly, claims adjusters must scrutinize occupancy and named insured status early in any claim involving separated couples.
These issues often arise only after the damage is literally done. By that point, one spouse may be facing not just the loss of a marriage, but the loss of a home, personal possessions, and any path to insurance recovery. In Austin, the wife’s possessions were destroyed in a fire set by her estranged husband, but the court ruled she had no standing to recover anything. Not even Kentucky statutes intended to shield abuse victims from insurance discrimination helped.
This result may feel unjust, but it was legally predictable and practically preventable. Had Austin’s name been listed on the policy, or had she secured a separate policy or endorsement after moving out, the outcome may have been dramatically different. As courts repeatedly emphasize, unambiguous policy language will be enforced, and coverage turns on precise definitions, not equitable intent.
This case is a powerful reminder for all professionals working at the intersection of family dynamics and property rights: Insurance should be high on the checklist in every separation, custody, or divorce planning session. It’s not merely a financial issue; it’s a matter of legal survival when catastrophe strikes.
We have previously warned and written about these issues. I would suggest reading How Does Divorce Affect Your Property Insurance Claim? and Tiger Woods Affair Highlights the Impact of Separation or Divorce on Insurance, where I stated:
Whenever adult relationships end and separation of families begin, insurance contracts may be impacted. These are always sad revelations, but the impact can be even worse when property is damaged and insurance coverage disputes arise because nobody thought about how property insurance is affected. As a practice pointer for those attorneys practicing family or divorce law, insurance issues should be addressed right away and insurance agents consulted immediately regarding how separation or divorce can affect coverage. Insurance agents and brokers should always be aware of and inquire about the family relationship and who is living where, because of coverage implications. Unfortunately and understandably, insurance coverage is often the last item on anybody’s mind during such emotional turmoil.
I hope that this blog post serves as an essential reminder that insurance coverage plays a vital role as a safety net. At life transition points, insurance should always be considered and carefully reviewed.
Thought For The Day
“You may have a fresh start any moment you choose, for this thing that we call ‘failure’ is not the falling down, but the staying down.”
—Mary Pickford
1 Austin v. State Farm Fire & Cas. Co., No. 1:23-cv-00140 (W.D. Ky. May 6, 2025).
