No one knows what’s in store for them tomorrow! Be it good or bad, anything can happen to you without any prior notice. This is where insurance policies come into play - they help you or your family by providing much-needed financial stability. A car insurance policy enables you to stay afloat financially by providing cover against the damages caused to or by your car, be it third-party liabilities or personal loss.
Now, the big question here is what happens to the car insurance if the policyholder dies?
Let’s understand the procedure to be followed in such a case.
What Happens to the Car Insurance Policy After the Untimely Death of the Policyholder?
Like other assets of a deceased person that go to the nominee or the legal heir, a car also goes to a nominated individual. As a result, the car insurance policy to gets transferred to the nominee or legal heir. Note that the policy should still be valid to make this transfer possible. Even the best of insurers in the country would not transfer an expired policy to the legal heir/nominee after the death of the policyholder.
One very important thing to keep in mind is that if the policyholder has named a nominee who is not the legal heir, then the car insurance policy will be handed over to the nominee. On the contrary, if there is no nominee, it will directly go to the legal heir.
A death in the family often drives away all other thoughts, but this should not stop you from completing your legal formalities. It is crucial that you transfer the insurance to your name as quickly as possible, while the policy still stands valid. For this, you first need to inform the insurance service provider about the need to transfer the policy. Post this, you will be asked to submit the necessary documents to complete the process.
Who All are Involved in the Whole Process?
When it comes to buying a car insurance policy, the policyholder and the car insurance provider are the two parties required in the whole process. However, when it comes to transferring the car policy to a new policyholder due to the demise of the original policyholder, the number of people involved in this process changes.
1. Legal Heir/Nominee – The legal heir or the nominee is the first person involved in this process. As mentioned above, it will be the legal heir who will get the deceased’s car insurance policy if there was no mention of a nominee for the same. However, if mentioned, the nominee will get precedence over the legal heir to transfer the policy to his/her name.
2. Insurer – Naturally, the insurance provider plays a huge role in this, as the company needs to change the details at their end. You need to inform an insurance agent about the policyholder’s death and provide the necessary documents on time. With this, they will be able to form a new policy document in the name of the legal heir/nominee.
3. Road Transport Office – The RTO is the last entity involved in the process, as the Registration Certificate (RC) of the vehicle has to be transferred to the new owner of the vehicle. This RC stands as the proof of the change in the ownership of the car, which is required to transfer the car insurance policy to the new owner. The following are the documents required to transfer the RC of the car.
- Form 31 of the RTO
- Original RC of the car
- Death Certificate of the deceased policyholder (car owner)
- Car’s chassis imprint
- PUC (Pollution Under Control) Certificate
- Details of the car and its sales certificate
- A valid car insurance policy
- NOC from the bank
- Address and Identity proof of the nominee/legal heir
- Succession certificate
- Aadhaar and PAN card's attested copies
- Transfer fee
- Form 29 and Form 30 (if asked for)
What is the Natural Succession Used to Determine the Legal Heir?
Different people can become the legal heir as per natural succession, based on their relationship with the deceased policyholder. We have discussed two common scenarios to give you a better understanding -
1. If the late policyholder had a spouse: As per natural succession, the policy will be transferred to the spouse if there is no other nominee mentioned. Most married people typically name their spouses as nominees. Note that the legal proceedings are much smoother if the nominee and the legal heir are the same.
2. If the late policyholder was a single parent: In such a case, his/her child will automatically become the legal heir to the policy and the car. If there is more than one child, then the will of the deceased person or other processes will be considered to determine the right legal heir. However, if one of the children has been mentioned as the nominee, he/she will naturally become the legal heir.
What are the Documents Required to Transfer a Car Insurance Policy?
The legal heir or the nominee will have to submit the following documents to complete the transfer:
- Policyholder’s death certificate
- Document of the original car insurance policy
- The car’s original RC
- Accurately filled in RTO forms required for the transfer of policy
- A NOC from the bank, only if there is an ongoing car loan
- PUC Certificate of the car
- Succession certificate
- A notarised affidavit, which states that the car insurance policy should be transferred to the name of the nominee or the legal heir
- PAN Card or Aadhar Card’s self-attested copy
- Marriage Certificate’s copy, when the legal heir is the spouse
As a policyholder, you must clearly identify a nominee in your insurance papers to prevent any conflicts in the future. Additionally, keep all essential documents in a folder that your family can access easily in case an unfortunate event takes place. The very purpose of insurance is to make sure your loved ones are financially secure and making the process of transferring insurance and car details easy for them can turn out to be a huge blessing during dark times.
Learn more about how your car insurance can help your loved ones stay financially afloat by reading this article about personal accident cover.