Finance

What Happens To A Car Insurance Policy Upon The Policyholder’s Demise?

The passing on of a loved one is a time of deep emotional distress for their next of kin. However, this is also a crucial time for handling important documentation that will clearly state what happens to the deceased person’s assets. While doing paperwork during a period of bereavement can be stressful, it is also important to ensure things get handled at the right time.

If the deceased person drove a vehicle, it is important to understand what happens to their car insurance policy after their death. In this article, we will take a look at an overview of the documentation and transfer of car insurance when the policyholder passes on.

What happens to an active car insurance policy when the insured person dies?

When a car owner passes away, their legally named heir will inherit the vehicle. As part of the same process, the valid car insurance policy too must get transferred to the legal heir. However, keep in mind that this transfer will only be done on a valid car insurance policy. If the policy has expired, the heir will have to buy fresh coverage to secure the vehicle in question.

Do note that the legally named heir would need to produce all the relevant documents that are requested by the insurer and follow the procedure set in place for transfer of insurance ownership.

Parties involved in the transfer of car insurance after the policyholder’s demise

Normally, when you purchase car insurance, the entire transaction happens between you and the insurer. However, the process of transferring a car insurance policy upon the policyholder’s demise sees three parties involved:

  • Heir
  • Insurance provider
  • RTO (Regional Transport Office)

The legal heir is the one mentioned in the deceased person’s will. It is usually the spouse; however, some people may also name their child. The heir must get in touch with the insurance provider who will guide them on the steps to be followed and documents to be submitted for policy transfer. Some of the documents that you will need to submit include the policyholder’s death certificate, original motor insurance policy, car registration certificate, self-attested copy of Aadhaar card, and no-objection certificate from the car loan financer (in cases where applicable). Do make sure to ask your insurance company for a proper list of the documents they require.

The heir must also reach out to the RTO for name change on the vehicle’s registration certificate. Once the registration certificate bears the heir’s name, they can properly get the car insurance policy too transferred onto their name.

Important points to keep in mind

Do keep these points in mind when transferring car insurance after the original policyholder dies:

  • Do not drive the vehicle until the transfer has been completed
  • Do not make any delays in transferring the car insurance policy
  • Seek professional help from a lawyer, if required, at any stage of the process

Finally, do remember that it is mandatory for all car owners to have at least third-party motor insurance on their vehicles. Not keeping this basic coverage valid on your car can see you end up paying a hefty fine, if you get caught. Plus, having car insurance also ensures you are financially protected against losses and damages that may arise from mishaps and accidents. These days, you can easily renew your coverage for both private and commercial vehicle insurance online with ease.

We sincerely hope that the information given in this article helps. Take care.

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