First ever divorce insurance policy devised

09/06/2010

A North Carolina-based insurance start-up has become the first company in the country to offer insurance against divorce.

Safeguard Guaranty Corporation is offering divorce insurance called WedLock, which allows couples to take it out as part of a prenuptial agreement to help cover any costs that may arise if their marriage fails.

The policy has been a long-time in the making, with many people understanding the logic of such a policy – as divorce costs regularly reach $15,000 to $30,000 – but no underwriters willing to take it on.

Safeguard's founder, entrepreneur John Logan, was inspired to take on the mission of setting it up after what he called the "financial devastation" of his own divorce.

"These are individual policies. A husband could buy one for himself. A wife could buy one for herself without her husband knowing about it," he said. "We'd rather have a scenario where a man and woman buy a policy for each other, where it's part of a prenup."

Before the sale of any policies, the company offers a probability calculating service to determine the likelihood of whether you would need to take out a policy or not.

Answering critics who have said that the policy could be wide-open to abuse and fraud, Logan said that people have to pay in for a minimum of 48 months before filing a claim and that, like car insurance, it is a casualty or liability policy, which means it has no accruing investment or surrender value.