Car Insurance After Owner's Death: What Happens?

A motor insurance policy provides financial protection to the vehicle owner in case of an emergency or accident. But when the car owner passes away, their assets along with the car are passed on to his or her legal heir. What happens to the car insurance policy under such circumstances? Understanding this is crucial to avoid any lapses in coverage or legal complications. This blog explores the steps required to manage car insurance after the demise of the car owner.

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

When a person passes away, all their assets, including their car, are legally transferred to his or her heir. Consequently, the car insurance policy also needs to be transferred to the legal heir's name, provided it's still valid. 

The following are the points that need to be understood in this context-

• Validity of insurance policy: The insurance policy can only be transferred if it is valid at the policyholder's time of death. If it's expired, the insurance company won't transfer it, and the heir must purchase a new policy.
• Renewal of expired policy: If the car insurance policy expires after the policyholder's death and the heir hasn't transferred it yet, they can renew it in their name. The heir can either renew the existing policy or compare other insurance plans for a better option.
• Entities involved in insurance transfer:
  1. Insurance Company: Inform the company about the policyholder's death to update the policy details.
  2. Legal Heir: The policy transfers smoothly to a specified nominee. Without a nominee, it goes to the legal heir after due process.
  3. Regional Transport Office (RTO): The heir must transfer the car’s Registration Certificate (RC book) to their name at the RTO. A ‘No Objection Certificate’ from the bank might be necessary if the vehicle was on loan with pending instalments.

Documents Required to Transfer Car Insurance After Owner's Death

To transfer the car insurance to the new owner, several documents must be submitted to the RTO and the insurance provider. These include-

1. Death Certificate of the previous owner
2. The Registration Certificate or RC for the car 
3. Proof of relationship between the deceased and the heir
4. A notarised affidavit stating the transfer of insurance to the new owner
5. The insurance policy documents
6. Identity proof of the new owner
7. Form 30 and Form 31 used by the RTO for ownership and insurance transfer
8. No Objection Certificate (NOC) from the financer in case the car was purchased with a loan
9. Marriage Certificate (in case the heir is the spouse of the deceased)

Things to Remember While Transferring Car Insurance After Policyholder's Death

Things one needs to remember when transferring car insurance after the owner’s demise are-

1. Timely Initiation of the Process: The ownership transfer needs to be initiated on time to avoid any lapse of coverage.
2. Contacting the Insurance Provider: The insurer needs to be informed about the death of the policyholder.
3. Updating Ownership of Car: The vehicle ownership needs to be updated first at the RTO before starting the insurance transfer process.
4. Check Terms of Policy: Review the terms and conditions of the existing policy to understand all details and ensure a hassle-free transfer.
5. Legal Aid: Consult a lawyer, if necessary, to ensure you complete the transfer properly.

Importance of Car Insurance

A car insurance policy is not just a legal mandate but also a safety net for the vehicle owner. One should always have updated vehicle insurance for the following reasons-

1. Driving without an existing insurance policy is illegal in India.
2. Car insurance protects the vehicle owner from the financial burden of urgent repairs due to accidents.
3. A car insurance policy ensures peace of mind.
4. Valid car insurance is essential for the transfer of ownership and sale of a vehicle.

Make sure to find car insurance online immediately after purchasing a vehicle and make timely premium payments to make the most of its coverage plans. This simple step can save you precious time and money in unforeseen circumstances.

Conclusion

In case of the unfortunate death of a car owner, their vehicle is transferred to their legal heir. Similarly, the car insurance policy also must be transferred to the heir. This will happen only if the policy is valid.  This blog is a simple guide explaining the process and documents required for transferring the vehicle to its new owner in the event of the death of the original owner. Managing car insurance after the policyholder’s demise may seem tedious, but it is a crucial step that protects the interests of the surviving family members and heirs in the long run. 

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.