What Happens to Car Insurance When the Policyholder Dies?

Justin Lewis/Getty Images, Illustration: Hunter Newton/Bankrate

The death of a loved one comes with a variety of tasks that will need to be handled in the weeks and months following the death, such as closing bank accounts and managing wills. One important task that parties involved will need to handle is handling the deceased’s auto insurance. Bankrate’s insurance editorial team has created this guide to answer these and other questions about auto insurance, making it relatively easy to handle after the loss of a loved one.

What happens to an auto insurance policy after the policyholder dies?

One misconception about auto insurance is that if the primary insurer dies, the policy is automatically cancelled and coverage stops. Unfortunately, the insurance company has no way of knowing that the insurer has passed away until a spouse or next of kin notifies them and asks them to cancel the policy. After the primary insurer dies, the auto insurance policy must be cancelled or their name removed from the policy if another driver is insured.

If you need to cancel a deceased person’s auto insurance, the process is usually simple if you were their spouse or the driver of the policy. However, if you weren’t related to the policyholder, or you’re not a spouse but are the executor of their estate, canceling their insurance can take longer.

Termination of a spouse’s auto insurance policy

Cancelling your car insurance policy after the death of your spouse is a relatively simple process. You will likely need to provide proof of the policyholder’s death to complete the process.

The basic steps are:

1. Call your insurance company: Contact the insurance company or agent and tell them that the policyholder has died and you want to cancel the policy. If you were also on the policy, you may be asked if you want to continue the policy and become the primary policyholder.
2. Provide documentation: The insurance company may require you to provide proof of the policyholder’s death, such as a death certificate, executor documents, etc. If you need to provide other documents, the insurance company will tell you what they require.
3. Wait for confirmation: Usually, insurance companies can officially cancel your policy within a day. The last step is to wait for confirmation of the cancellation. If monthly, semi-annual or annual premiums have already been paid, you may be able to get some refund from the insurance company.

If my spouse dies, do I have to get new car insurance?

If your spouse dies, you may be able to keep your car insurance policy, but in some cases you may have to get a new car insurance policy. For example, if you and your spouse both have the same policy, you can ask the insurance company to remove your spouse and leave you as the primary policyholder. That way, you’ll pay any premiums that aren’t already owed. When you renew your existing policy, it will be re-rated with one less driver, which could result in a reduction in your premiums.

If you don’t already have insurance or a title to your vehicle, you may need to get new car insurance. To find out what works best for your situation, it’s a good idea to contact an insurance company or agent, explain your situation, and they can suggest a solution based on who is the registered owner of the vehicle title and your current insurance details.

Cancelling an auto insurance policy for someone other than your spouse

It is more difficult to cancel the auto insurance of an unrelated policyholder. However, if you are the executor of the policyholder’s estate or a friend or relative, you should be able to cancel the deceased policyholder’s auto insurance if you can prove your relationship to the deceased policyholder. Here are some steps you can take:

1. Call your insurance company: Call the insurance company or agent and tell them you want to cancel the deceased person’s insurance. You may need to provide certain information, such as the policyholder’s Social Security number and personal information, to prove you’re not a stranger attempting to commit auto insurance fraud.
2. Provide documentation: Whether you are related to the policyholder or not, you will likely need to provide documentation proving that the insured has died and that you are legally permitted to cancel their policy. If you are not related to the insured, you may be asked to provide additional information.
3. Wait for confirmation: If you are cancelling a policy for someone you are not related to, this may take a little longer as the insurance company needs to verify your status as executor. If the policyholder is entitled to money from past premiums, the money may be deposited directly into the person’s estate.

What happens to outstanding claims if an auto insurance policyholder dies?

If the policyholder dies without a claim being made, the policy can still be cancelled. Insurance companies will continue to process claims until settlement, even if the policy is void.

However, keep in mind that even after a claim is settled, the policyholder may still have to deduct deductibles and other out-of-pocket expenses from the policy payout. If the policyholder dies, the estate becomes responsible for paying any outstanding amounts.

Will car insurance companies pay a refund if the policyholder dies?

If a refund is due, auto insurance companies typically provide it when a policyholder dies and the policy is cancelled. A refund may be due if the policy was paid in full and the expiration date has not been reached, or if the policy was paid monthly and the month has not ended. For example, if a monthly premium was paid on January 1st and the policy was cancelled on January 3rd, a portion of that month’s premium may be refunded. Every insurance company is different, and the rules that regulate insurance companies vary from state to state. Contact your insurance agent or company representative with the deceased person’s insurance company to see if a refund is available.

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