What happens to an auto insurance policy when someone dies?

If you have recently lost a loved one and you are dealing with the necessary paperwork, you will also need to sort out car insurance after the death of the owner. 

When someone passes away their auto insurance needs to be canceled, but this is not an automatic process. The steps involved will depend on your relationship to the deceased policyholder and the wording of the policy. 

This article will explain what happens to an auto insurance policy when someone dies, how you can cancel it, and what documentation you will need to provide.

What happens to their auto insurance policy when someone dies?

When someone passes away, their policy will need to be canceled or they need to be removed from it if there are other drivers registered on the same policy.  A remaining spouse,  a close relative, or an estate executor will need to initiate the cancellation process. 

To be sure, the best thing to do is to call the insurance company on the policy and inquire about the necessary steps. 

You and other family members shouldn’t drive the car until the coverage is sorted out. When speaking to the auto insurance company, ask them about setting up temporary arrangements to allow you or the estate executor to drive the car for maintenance and estate needs. 

Some policies already predict these issues by covering the surviving spouse and a legal representative. This type of coverage is called “extended non-owned” and it will allow you or the legal representative to use the car for everyday purposes. However, other family members shouldn’t use the car until the insurance company transfers the dead person’s car insurance. 

What happens to open claims after the death of the vehicle owner?

If there are any open insurance claims on the car policy of the deceased, you can still cancel the policy and the claim will be processed through a settlement. 

Any amount owed will be paid through the estate, while the insurance deductible can be taken out from the claim payout.

How to Cancel Car Insurance When Your Spouse Dies

If your spouse has passed away, their policy should be transferred to you, meaning that you would also be liable for payments to keep the policy active. The insurance rates might change based on your risk profile or any discounts the deceased driver previously had. 

To clarify, it’s best to call the insurance company directly. If you are not happy with the increase in rates, feel free to shop around for a better rate.

If you wish to cancel your spouse’s policy, the process should be fairly simple. The first thing you should do is call the insurance company and inform them of your loss. You will probably be offered to become the primary policyholder if you were previously listed on your spouse’s policy. 

If you choose to cancel the policy, the insurance company will most likely request proof of death of the policyholder, such as their death certificate or an estate executor form. Once you submit the required documentation the cancellation process should be done within a day or so, and you will receive a cancellation confirmation. 

You may also be eligible to receive compensation if that month’s premium was already paid by your spouse.

How to Cancel Car Insurance for Someone Other Than a Spouse

If the deceased policyholder was your relative or a friend, you will still be able to cancel their insurance but the process will be a bit more complicated than in the previous case. 

Make sure to call the insurance company first and explain the situation, including your relationship to the car owner who passed away. The company will probably require additional information to confirm your relation to the deceased, such as the owner’s personal information or their social security number.

Once you provide the necessary documentation, the insurance company will need to verify your authority to cancel the policy on behalf of the policyholder who passed away. 

When the process is complete you should receive a cancellation confirmation. Any reimbursements from the previously paid insurance rates will be transferred into the owner’s estate.

The Bottom Line on Car Insurance After the Death of the Policyholder

Dealing with insurance companies and required paperwork is probably the last thing you wish to be doing after losing a loved one. However, ignoring the process and using their car without ensuring proper coverage could leave you exposed to liability in the event of a crash.

Make sure to contact the passed away owner’s insurance company sooner rather than later to begin the cancellation process or make necessary changes that will allow you to use the car without liability risk.