What Happens to Car Insurance Policy After the Death of the Policyholder?

Posted on: September 21, 2020, by :

Life is unpredictable. Anything good or bad can happen any time irrespective of whether someone is watching TV at home or driving a car. Fortunately, we have car insurance to take care of any unforeseen damages to our four wheelers that may lead to financial losses, including third party liabilities. Besides, car insurance is a legal mandate for all four wheelers plying on public roads. That’s how important motor insurance is and thus, everyone should compare car insurance plans before buying the most suited plan for themselves.

What Happens to Car Insurance Policy After the Death of the Policyholder?

Car insurance comes to the aid of a person when his/ her car is involved in an emergency. But what happens to the car insurance policy in case of an untimely death of the policyholder. Does the policy continues or ceases to exist? This article explains everything that the family members of the deceased policyholder should do when it comes to car insurance.

What Happens to Car Insurance Policy After the Death of the Policyholder?

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

Whenever there is a change in the ownership of a car, its insurance policy also needs to be transferred to the new owner of the vehicle. With the demise of the policyholder, the ownership of the car gets transferred to the legal heir and thus, the car insurance also needs to be transferred to the latter’s name.

However, car insurance can be transferred only if the policy is still valid. In case the policy was 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 fresh four wheeler insurance 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 death of a person is an extremely difficult time for the family. However, the days following the person’s death is a crucial time to complete a few important legal paperwork, including the transfer of car insurance policy. Thus, the legal heir should get the car insurance policy transferred from the deceased’s name to his/ her name at the earliest. But first, he/ she should inform the motor insurance company about his intention of transferring the policy to his name due to the policyholder’s death. He/ she will also have to submit certain documents to substantiate the transfer process.

In case the car insurance policy gets expired after the policyholder’s death and the heir is unable to get the policy transferred before the expiry date, he/ she can get the policy renewed in his/ her name. The heir can either renew the same policy or compare car insurance plans to find a more suitable policy.

People Involved in Transferring Car Insurance 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 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 car insurance policy after the death of the policyholder. They are:

  • Legal Heir/ NomineeThe first entity involved is the legal heir/ nominee of the deceased policyholder. If the policyholder had made a nominee while buying car insurance, the nominee will be eligible for the policy transfer after his/ her death. In case no nominee had been specified by the policyholder, his/ her legal heir will be eligible to get the car insurance policy transferred to his/ her name.
  • Motor Insurance ProviderThe next entity involved is the motor insurance company offering protection to the deceased person’s car. The insurer must be informed about the death of the policyholder at the earliest. This will help them to 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 last person involved is the Regional Transport Office (RTO) where the deceased person’s car has been registered. To apply for car insurance policy transfer, the legal heir will have to get the Registration Certificate (RC) of the deceased policyholder’s car transferred to his/ her own name. This is because motor insurer needs a copy of the new RC, with the legal heir’s name, as a proof of transfer of the car ownership and will only then transfer the car insurance to the heir’s name.

Documents Required to Transfer RC After the Car Owner’s Death:

The legal heir will need to submit the following documents to the RTO to get the deceased person’s car transferred to his/ her name:

  • Filled-in Form 31 of the RTO
  • Original RC of the car
  • Death certificate of the original car owner
  • Chassis imprint of the car
  • Pollution Under Control (PUC) Certificate
  • Details of the car and its sales certificate
  • A valid car insurance policy
  • No Objection Certificate (NOC) from the bank (in case of an ongoing car loan)
  • Identity and address proof of the legal heir
  • Succession certificate
  • Attested copy of Aadhaar card or PAN Card
  • Transfer fee
  • Filled in Form 29 and Form 30 (if required)

Who Becomes the Legal Heir for Car Insurance Transfer After Policyholder’s Death As per Natural Succession?

As per natural succession, different people become legal heir for car insurance policy transfer based on the relationship of the deceased policyholder. Take a look:

  • If the Deceased Policyholder Has a Spouse:In case the deceased policyholder has a spouse, he/she will become the legal heir for transferring car insurance policy as per natural succession. Most people specify the name of their spouse as the nominee in the car insurance policy. The policy transfer process is easier if the legal heir and the nominee are the same. All the best car insurance companies in India provide the nominee details to the legal heir of the deceased policyholder when enquired.
  • If the Deceased Policyholder Was a Single Parent:In case the deceased policyholder was a single parent, his/ her child would become the legal heir for transferring car insurance policy as per natural succession. If the policyholder is survived by more than one child, the legal heir as per his/ her will or other processes will be eligible for car insurance policy transfer. Moreover, if one of the children is specified as a nominee, he/she will be eligible for policy transfer.