Among the many components of car insurance, designating a nominee is a crucial yet often overlooked aspect. Timely choosing a nominee ensures that, in the unfortunate event of the policyholder's demise, the insurance benefits are transferred easily to a chosen individual. This article delves into the significance of a nominee in car insurance policies, the process of adding one, and the benefits thereof.
What does nominee mean in car insurance?
Well-planned insurance coverage for your car includes a well-thought decision regarding a suitable nominee. It ensures a smooth transfer of car ownership in case of the policyholder’s demise. Keeping this in mind, let us understand who a car insurance nominee is and what are his/her rights and duties.
Meaning of nominee in car insurance policies
While purchasing the car insurance online, you need to name a nominee along with other essential personal details. A nominee in car insurance serves a similar function as that of any other insurance policy or any other asset an individual holds.
Legally, in the case of an individual’s demise, the assets and any other property owned by him/her is passed on to the legal heir. When naming a nominee, such legality is executed and brought to force, making the named individual the legal heir and effecting policy transfer in the case of the unfortunate demise of the policyholder.
Naming a nominee also eliminates any chances of legal dispute if there are multiple legal heirs to the individual. For instance, if a person has two children, X and Y, both would be the legal heirs to his property. However, if he has named X as the nominee in his car insurance policy, in the case of the policyholder’s demise, any scope for ownership dispute is eliminated.
Now, one must also understand that the policy should be active while such policyholder is deceased for this to effect. The benefits mentioned under the coverage plan would be applicable and claimable by the nominee only if the policy was active during the policyholder’s demise.
Under circumstances where the car insurance nominee hasn’t been mentioned, the ownership of such policy passes on to the legal heir without dispute.
Nominee/legal heir to motor vehicle policy as per natural succession
In case a policyholder has mentioned a nominee to the coverage benefits of an active policy, the ownership is passed to the nominee of the deceased. However, for natural succession, the following relationships qualify to become legal heirs of the car insurance plan in the case of a policyholder’s demise.
- Spouse
In case the policyholder has a spouse, he/she would be the immediate legal heir to the policy after the former’s demise. The car insurance policy would thus be transferred to the husband or wife under natural succession. If such a name has been specified in the car insurance policy documents as the nominee, the policy transfer is simplified.
- Child
If a policyholder is a single parent, the ownership of such policy will be transferred to the child after the former’s demise as per natural succession. In case multiple children are involved, such transfer will be based on the policyholder’s legal heir details in the will or other similar processes. If a single child of multiple children is specified as the nominee, such transfer to the mentioned child will be indisputable.
How to add nominee to your car insurance?
Adding a nominee to your car insurance policy is a straightforward process:
- During Policy Purchase or Renewal: Most insurers provide an option to nominate an individual at the time of purchasing or renewing car insurance online. You can specify the nominee's details in the application form.
- Through Endorsement: If you wish to add or change a nominee during the policy term, you can do so by submitting an endorsement request to your insurer. This typically involves writing a letter or filling out a form with the new nominee's details.
It's advisable to review and update your nominee details periodically, especially after significant life events like marriage, childbirth, or the demise of a previously nominated individual.
Benefits of adding a nominee
Designating a nominee in your car insurance policy offers several advantages:
- Ensures Smooth Claim Settlement: In the event of the policyholder's death, the insurer can directly disburse the claim amount to the nominee, facilitating a hassle-free settlement process.
- Avoids Legal Complications: Having a nominee helps in sidestepping potential disputes among family members regarding the distribution of insurance benefits.
- Provides Financial Security: The nominee can utilise the insurance proceeds to manage immediate financial needs, such as medical expenses or loan repayments, ensuring financial stability during a challenging time.
Conclusion
It is best to make sure to name a car insurance nominee while purchasing the motor vehicle policy to eliminate any chances of hassles or disputes among natural heirs. Other parties to be contacted during policy transfer after such demise include the concerned RTO as well as the insurance provider. One can take the assistance of a lawyer for a more streamlined transfer process. It is also suggested for such a nominee to not drive the car if the policy has expired and buy a new coverage in his/her name for hassle-free coverage claims. Whether you have a third party car insurance policy or a comprehensive one, adding a nominee ensures a smooth transfer of benefits, giving you and your loved ones peace of mind.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the Insurance industry and products. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.