What happens to a person’s car insurance policy when they die?

Have you ever wondered what happens to car insurance when someone dies? Is their car insurance still valid?

Typically, most people who lose loved ones will look through accident, life, and final expense insurance policies even when dealing with their grief. But they may overlook auto insurance, even though the deceased person’s car has to be dealt with.

So, what happens to car insurance after the death of the owner? Read on to find out.

Does car insurance coverage stop when someone dies?

As long as the auto insurance premiums are up to date, the auto insurance coverage will remain in effect after the insured dies if they left behind a listed spouse who chooses to keep the coverage. If you and your spouse were both insured under the same policy, you can easily file a car insurance claim and get compensation because the coverage extends to you.

Often, you can purchase joint car insurance even if you’re an unmarried couple. However, not all couples are insured under one policy. For example, some buy separate car insurance policies. In such a case, the surviving spouse provision allows the surviving spouse listed on the policy to inherit the car insurance coverage for the remainder of the policy’s term. In other words, you can keep using the vehicle, but the insurance company may require you to become the primary policyholder.

If the deceased was paying monthly premiums, you would need to keep paying them for the remainder of the term to keep the coverage.

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What happens to auto insurance when someone dies without a spouse?

According to IRMI, when someone dies and doesn’t leave behind a spouse, the auto insurance policy may provide limited coverage to the estate’s executor.

If you are the estate’s legal representative, you have the legal responsibility to use and maintain the deceased’s car. That means you typically can’t drive the vehicle for personal reasons.

Instead, you have the permission to drive the car for maintenance purposes and to serve the estate’s needs until the car is sold or otherwise disposed of. So, you can take it to tire dealers, auto repair shops, and similar places, but you can’t go shopping or travel with it.

In addition, as the legal representative, you cannot permit other people to drive the deceased person’s car. Any claim you file will be denied if someone else gets involved in an accident while using that vehicle.

How do you retain auto insurance when someone dies?

If you’re a spouse of someone who dies with an active car insurance policy, you need to inform the insurance company of their passing. You may be required to present relevant documents such as death certificates. Then the insurer will remove the deceased’s name from the policy.

You’ll then need to decide whether you want to inherit the policy or cancel it. If you inherit the policy, you’ll be responsible for continuing to pay for it. Keep in mind that the policy terms may also change. As a result, you may end up with different insurance rates.

IRMI states that if you are the executor and wish to use the vehicle for more than estate business, you can purchase an extended named non-owner or endorsement policy. The non-owner car insurance usually covers those without cars but who borrow or rent them.

Alternatively, you can contact the insurance company to amend the policy so it covers you and the deceased’s estate. Then you can use the vehicle for personal use until the estate is settled. In addition, you can permit others to drive it without compromising the coverage.

How do you cancel car insurance when someone dies?

Regardless of whether you are the spouse or legal interest, you can cancel the policy by contacting the insurance company and explaining your circumstances. However, it may be best to wait until the car is registered in someone else’s name.

Some companies tend to charge an early termination fee for canceling a car insurance policy. This fee may be waived in the event of a death, though, and you may also be entitled to a refund of the unearned premiums.

It is worth noting that you can still cancel a policy and get any open claim settled. The insurance company will subtract any applicable deductible from the settlement before giving the remainder to the deceased’s spouse or estate. If the deceased passed on due to a car accident, the insurance company is likely to total the car. In that case, you can file a claim, wait until it is resolved, then cancel the policy.

What if you want to keep the car?

If you intend to keep the car, you can first transfer the car’s title to your name and then buy a new policy that provides you with coverage. Then, shop around and compare prices online to get the best rates available.

Read more: Can I transfer car insurance to another person?

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Maintaining Auto Insurance When Someone Dies

When someone dies, their coverage may or may not extend to you. It depends on your relationship with the policy owner and whether you were included in the policy. Spouses have a much easier time getting the coverage extended to them. But legal representatives also get limited coverage.

However, until the insurance company clarifies the issue and you are sure you’re covered, you should not drive the deceased person’s vehicle. If you get involved in an accident, you may be liable for all related damages and injuries. It’s important to provide all the relevant documents to the insurance company so it can change the policy as soon as possible.

Case Studies: What happens to a person’s car insurance policy when they die?

Case Study 1: Spouse Inherits Coverage

After the death of her husband, Mary was listed as a spouse on his car insurance policy. As the policy premiums were up to date, the coverage remained in effect for Mary. She was able to file a car insurance claim and receive compensation because the coverage was extended to her.

However, Mary had to inform the insurance company of her husband’s passing and may need to provide relevant documents, such as death certificates.

Case Study 2: Limited Coverage for the Estate’s Executor

James passed away without a spouse. As the executor of his estate, his auto insurance policy provided limited coverage to his estate’s executor. The executor, in this case, could use the vehicle for maintenance and estate-related purposes but was not allowed personal use or permit others to drive the vehicle. Any claims filed would be denied if someone else got involved in an accident while using the car.

Case Study 3: Cancelling the Policy

After her mother’s passing, Sarah, as the legal representative of the estate, decided to cancel the car insurance policy. She contacted the insurance company, explained the circumstances, and provided the necessary documents.

Sarah waited until the car was registered in someone else’s name before canceling the policy. Some insurance companies may waive early termination fees in the event of a death, and Sarah was entitled to a refund of the unearned premiums.

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