What happens to a car insurance policy when someone dies?
When someone dies, it’s important to know what happens to a car insurance policy and what needs to be done. The policy is no longer valid the way it is because the named policyholder is no longer living.
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UPDATED: May 9, 2022
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- Insurance requirements vary by state
- The insurance company should be notified whenever a policyholder passes away
- A new policy needs to be obtained to reflect who is the registered owner of the car
When someone dies, it’s important to know what happens to a car insurance policy and what needs to be done. The policy is no longer valid the way it is because the named policyholder is no longer living. It may seem crass to focus on car insurance when someone dies, but it helps to keep things from piling up afterwards.
You need to take action as quickly as possible in order to stay current with state regulations and ensure that the car is still street legal.
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Insurance Requirements in Your State
A car insurance policy is no longer valid at the policyholder’s time of death.
However, if there is another named policyholder, such as when a husband and wife are on the policy, the policy remains valid. It is then up to the other policyholder to update the policy so that the auto insurance provider knows what has happened.
When there is one less policyholder on the policy, the cost of the insurance premium can decrease.
The vehicle registration rules vary by state. In Delaware, you need auto insurance prior to registering a vehicle. You will need to determine what is going to happen to the vehicle and then adjust the auto insurance to reflect those changes.
If the vehicle is registered to the deceased, will need to change the registration first. You may need to sell the car as part of probate orders or transfer the title to the person who was given the car in the will.
It is then the new owner’s responsibility to obtain the necessary car insurance policy.
It’s important to check with the state – and this checking can be done with the DMV. The DMV will ensure you follow all of the state regulations.
The DMV has to be made aware that the person has passed in order to remove them from the driver’s license system. In most instances, you will need to provide them with a copy of the death certificate.
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Notifying the Insurance Company of the Death
The insurance company will need to be notified of the person’s death. This notification will allow premiums to stop being paid. It will also ensure that the car insurance after the death of the policyholder will be available for a few options.
Informing the company will also make it possible to name another person on the policy or cancel the policy completely so that a new person can obtain a policy to cover the car that the deceased had owned.
There are all sorts of possibilities as to how this scenario will play out based upon who remains on the policy.
- If it was a husband and wife on the policy and the husband survives, a child might be named as a new policyholder as a way of being able to drive the vehicle in a caregiver status.
- If the person lived on their own, the family might cancel the policy because the car is going to be sold.
Most insurance companies are very understanding and will work quickly to stop the policy.
While many insurance companies will suspend the policy immediately so that premiums are no longer being paid, they won’t cancel the policy until they receive a copy of the death certificate.
Obtaining a death certificate is a process and one that can take as long as two months depending on the situation as well as the state. This delay is why it’s best to communicate with the company immediately.
If the insurance company will suspend coverage until the certificate is in hand, it could save the family several months of premiums.
Obtaining a New Car Insurance Policy
A new car insurance policy can be obtained once the car of the deceased transfers hands. It’s important to get a new policy before taking the car out onto the road. Someone has to take legal responsibility if the car is to be driven. This is why the car insurance can’t be in the deceased owner’s name.
The main reason for getting a new policy is because at the scene of an accident you will be asked for registration and proof of insurance. If neither document matches your name, things can become very complicated.
Getting a new car insurance policy isn’t going to be a time-consuming process. In many instances, a policy is obtained in minutes.
You can get quotes online and this allows you to compare rates between the different insurance companies. Once you find a good policy with the right amount of coverage at a good price, the rest is easy.
A policy number is provided over the phone or online, allowing you to have the needed coverage right away.
When someone dies, the car insurance policy becomes void. However, you must take the following steps:
- you need to notify the insurance company of what has happened so that premiums stop
- you then need to transfer the car registration to someone new before getting a new car insurance policy
- before you take any action, contact the DMV in your state to find out what the rules are
- call the insurance company to at least suspend the policy until you decide what you’re going to do next so you remain compliant with the state regulations at all times
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