Auto Insurance Validity: Death And Its Impact

The death of a policyholder can be a tricky situation for their family members to navigate. While auto insurance policies are not automatically cancelled upon the death of the policyholder, they do need to be transferred to the name of the legal heir or nominee. The process can be lengthy and complicated, especially if the policyholder did not specify a nominee, and the next of kin, executor, or estate administrator will need to provide various documents to the insurance company.

The policy will remain in force while the vehicle is being used by the executor for estate-related affairs

Dealing with car insurance after the death of the policy owner can be a complicated and tricky process. While the auto insurance policy will remain in force while the vehicle is being used by the executor for estate-related affairs, there are several other factors to consider.

Firstly, it is important to notify the insurer of the policyholder's death as soon as possible. This is because the insurance company has no way of knowing that a policyholder has passed away until they are informed. The process of cancellation is usually easier if the deceased's spouse or a driver insured on their policy can make the call. However, if the person making the call is unrelated to the policyholder, they will likely need to provide proof of being the executor to terminate the policy.

Secondly, while the policy will typically remain in force during the handling of estate matters, it is crucial to verify this with the insurance company, preferably in writing. This is because each insurance company's policies and procedures may vary. After the matters of the estate have been settled, the insurance company will likely allow the policy to be terminated.

Lastly, it is important to note that if the family of the policyholder decides to take possession of the car, they will need to change the title at the local DMV and purchase a new insurance policy. The family should refrain from driving the car until the necessary changes have been made to avoid any liability issues.

The policy will not be automatically cancelled

It is a common misconception that if the primary policyholder passes away, their auto insurance policy will be automatically cancelled and the coverage will stop. However, this is not the case. The insurance company has no way of knowing that a policyholder has passed away until a spouse, relative, or representative of the estate notifies them and requests to cancel the policy. Therefore, the policy will remain in force and will not be automatically cancelled.

If the deceased policyholder was your spouse, you can easily transfer their policy to yourself. You will need to contact the insurance company and provide documentation, such as a death certificate and proof of executorship. You will then become the primary policyholder and be responsible for making payments.

If you are a relative or the executor of the deceased's estate, you can still cancel their insurance policy, but the process will be more complicated. You will need to call the insurance company and explain your relationship to the deceased. The company will likely require additional information, such as the owner's personal information or their social security number, to confirm your relation to the deceased. Once you provide the necessary documentation, the insurance company will verify your authority to cancel the policy, and you will receive a cancellation confirmation. Any reimbursements from previously paid insurance rates will be transferred to the owner's estate.

It is important to note that you should not drive the deceased owner's vehicle until the policy is transferred to your name or the necessary changes are made to ensure proper coverage.

The policy can be cancelled at any time

When a person dies, their auto insurance policy will need to be cancelled or their name will need to be removed from the contract if there are other drivers on it. A remaining spouse, a close relative, or an estate executor will need to initiate the cancellation process.

Cancelling a Car Insurance Policy

A car insurance policy can be cancelled at any time. However, there may be a cancellation fee, and the insurance company may require a notice period before cancellation. It is best to consult the contract and speak to the insurance company about the cancellation process and any potential costs.

Documentation

Documentation is usually required to prove the policyholder's death and the status of the person cancelling the policy. This may include a death certificate, an executor of the estate form, or proof of executorship. If the policy is being cancelled by a spouse, they may be offered the option to become the primary policyholder.

Reimbursement

If the monthly, semi-annual, or annual premium has already been paid, the insurance company may reimburse the remainder of the payment. However, there may be a cancellation fee, and this will be taken from the reimbursement.

Timing

It is important to time the cancellation appropriately to avoid a gap in coverage, which could result in higher premiums down the road. It is recommended to have a new policy in place before cancelling the old one.

The policy can be transferred to the legal heir

When a person dies, their assets are transferred to their legal heir. This means that the ownership of their car is also legally transferred to their heir, who becomes the new owner. As a consequence, the car insurance policy needs to be transferred to the name of the legal heir, provided the policy is still valid.

However, car insurance can only be transferred if the policy is still valid. If the policy had already expired at the time of the policyholder's death, even the best car insurance companies in India will not transfer it to the legal heir. In such a case, the heir will have to buy a new four-wheeler insurance policy.

If the car insurance policy expires after the policyholder's death and the heir is unable to get the policy transferred before the expiry date, they can get the policy renewed in their name. The heir can either renew the same policy or compare car insurance plans to find a more suitable policy.

The policyholder might have also specified a nominee at the time of buying car insurance. In case the nominee and the legal heir are two different people, the policy will be transferred to the nominee's name after the policyholder's death. In the absence of a nominee, the policy will be transferred to the legal heir.

The legal heir should get the car insurance policy transferred from the deceased's name to their name as soon as possible. But first, they should inform the motor insurance company about their intention to transfer the policy to their name due to the policyholder's death. They will also have to submit certain documents to substantiate the transfer process.

People Involved in Transferring Car Policy After Policyholder’s Death

Generally, when someone buys car insurance, only two people or entities are involved in the process: the car owner and the motor insurance company. In case the policy has been purchased through an insurance agent or a car dealer, they become the facilitator.

But in the case of the death of the policyholder, a different set of people or entities are involved in transferring the car insurance policy. To be precise, three people/entities are involved during the transfer of the car insurance policy after the policyholder's death:

• Legal Heir/Nominee: If the policyholder had made a nominee while buying car insurance, the nominee will be eligible for the policy transfer after their death. In case no nominee had been specified by the policyholder, their legal heir will be eligible to get the car insurance policy transferred to their name.
• Motor Insurance Provider: The motor insurance company offering protection to the deceased person's car must be informed about the death of the policyholder at the earliest. This will help them change the policy details at their end and offer a new policy document to the legal heir upon policy transfer.
• Regional Transport Office (RTO): The legal heir will have to get the Registration Certificate (RC) of the deceased policyholder's car transferred to their name. This is because the motor insurer needs a copy of the new RC as proof of transfer of car ownership and will only then transfer the car insurance to the heir's name.

Documents Required to Transfer Car Insurance After Policyholder’s Death

The legal heir of the deceased policyholder will have to submit the following documents when applying for a transfer of car insurance policy:

• Death certificate of the policyholder
• Original car insurance policy document
• Original RC of the car
• Duly filled-in RTO forms for policy transfer
• No Objection Certificate (NOC) from the bank (in case of an ongoing car loan)
• Pollution Under Control (PUC) Certificate of the car
• Succession certificate
• Notarized affidavit stating the car insurance policy to be transferred to the legal heir’s name
• Self-attested copy of Aadhaar Card or PAN Card
• Copy of Marriage Certificate (in case the spouse is the legal heir)

The policy can be transferred to the nominee

When a policyholder passes away, their auto insurance policy will not automatically be cancelled. Instead, a spouse, relative, or executor of the deceased's estate will need to contact the insurance company to initiate the cancellation process or remove the deceased from the policy.

If the policyholder has a spouse, the policy can be transferred to them. This will require documentation, such as a death certificate and/or probate form/executor of the estate documents. The insurance company may also require additional information, such as the policyholder's social security number or personal information, to confirm the spouse's identity and their relationship to the deceased.

Once the necessary documentation has been provided, the insurance company will remove the late spouse from the policy, typically effective from the day after the reported date of passing. If some time has passed since the policyholder's death, the insurance company may reimburse the spouse for any premiums paid during this period.

It is important to note that the process of transferring the policy to a spouse may vary depending on the insurance company and the specific details of the policy. Therefore, it is recommended to contact the insurance company directly to understand the exact steps that need to be taken.

In the case where the policyholder does not have a spouse, the policy can still be transferred to a nominee, who is typically a close relative or legal heir. The policyholder can appoint a nominee at the time of purchase of the insurance policy, and this person will be responsible for receiving any compensation and carrying out the necessary proceedings of the insurance plan in the event of the policyholder's death.

While it is common to appoint a legal heir as the nominee, this is not mandatory. The policyholder can choose to appoint any person as the nominee, and this can be changed at any time by contacting the insurance company and providing the necessary documentation.

By nominating a person of their choice, the policyholder can make the process of transferring the policy to the nominee much easier and avoid any potential complications that may arise in establishing the legality of the heirs.

Frequently asked questions