When the policyholder passes away, the car insurance policy does not immediately lapse. The coverage remains valid for a specific period, typically three months or until the policy expires, allowing the legal heir to transfer the policy to their name. It is essential to transfer both the vehicle registration (RC) and insurance to the legal heir's name to ensure continued legal compliance and financial coverage.
Introduction:
The loss of a loved one is a difficult situation to deal with. In such times, handling administrative tasks, such as the transfer and management of insurance policies, often slips from one’s mind. A car insurance policy offers protection against third-party liabilities and own damages to the insured vehicle. But what happens to the policy when the policyholder passes away?
Some may think it automatically gets transferred to the heir or gets immediately cancelled, but that is not the case. This blog highlights everything you need to know about the status of a car insurance policy after the death of the policyholder.
What Happens to Car Insurance After the Policyholder’s Death?
After the unfortunate demise of the policyholder, the car insurance policy doesn’t immediately lapse or get automatically transferred to the legal heir. It remains valid for three months from the date of the policyholder’s passing or up until the scheduled policy expiry date, whichever is earlier.
After an individual’s death, all their assets, including the ownership of the car, are passed down to their legal heir. The heir also has the option to transfer the active car insurance policy to their name by contacting the insurance provider.
If it is not transferred within this period, the policy may become invalid. Policy transfer is only applicable for active policies and not for expired car insurance plans.
For example, if a married individual passes away, their spouse will get the legal ownership of their car. If the spouse wants to keep the ownership of the car and its insurance, they need to transfer it to their name by completing the necessary steps at the RTO and insurer, respectively.
Who are Involved in the Car Insurance Policy Transfer?
The initial policy purchase involves just the policyholder and the insurance provider. However, the policy transfer after the policyholder’s death involves three parties, namely the legal heir, the car insurance company and the RTO.
After the death of the policyholder, the legal heir can initiate the process of car ownership and car insurance online policy transfer. They will need to complete the necessary paperwork at the concerned RTO for the ownership transfer. They will also need to contact the provider of the insurance policy and notify them about the policyholder’s death at the earliest.
How to Transfer the Car Insurance Policy?
Inform the car insurance provider about the death of the policyholder and initiate the transfer. Complete the documentation, submit the necessary papers and pay the required fee.
The insurer must be notified within the stipulated timeframe. Then, fill out the transfer request form and provide the applicable supporting documents, including the vehicle RC, a notarised affidavit stating the policy to be transferred to the legal heir’s name and the death certificate of the policyholder. Once everything is evaluated and verified, the car insurance company will issue the updated car insurance policy.
Insurance companies in India, such as Generali Central, usually share the detailed document checklist for the policy transfer following the initial request.
What Documents are Required for the Car Ownership Transfer?
Besides the car insurance online policy transfer, the legal heir needs to transfer the ownership of the vehicle to their name. This process requires the submission of various documents, including the original vehicle RC and insurance certificate.
The process of RTO vehicle ownership transfer requires submission of Form 31, Form 20, insurance certificate, original RC, death certificate of the registered owner, PUC certificate, applicant’s PAN Card copy, DOB, passport-sized photos and proof of address, vehicle’s engine and chassis pencil print, proof of succession, declaration by the applicant and all legal successors of the deceased.
The process involves more than just document submission. So, make sure to have a clear understanding of how to transfer vehicle ownership in India before you apply.
Why is it Essential to transfer the Car Insurance Policy?
If the legal heir chooses to keep and use the car after the death of the registered owner, transferring the active car insurance policy becomes essential. By doing so, they can retain the accumulated NCB, continue the existing coverage and ensure legal compliance.
The No Claim Bonus discount is tied to the policyholder and not the vehicle. In case of the policyholder’s death, it can be transferred to the legal heir along with the policy transfer. Additionally, they can enjoy current coverage benefits and avoid the extra steps of buying a new policy from scratch. Ensuring valid coverage for your car helps you adhere to the law and avoid hefty fines.
What Happens If The Car Insurance Has Lapsed Before the Policyholder’s Death?
If the car insurance has already lapsed before the death of the policyholder, it cannot be transferred to the new owner. In such cases, buying a new car insurance plan is the only way. Consequently, the insurer may require a mandatory vehicle inspection, and you will lose the accumulated No Claim Bonus (NCB) benefits.
In Case the Vehicle is Sold, What Happens to the Car Insurance?
If the legal heir, who inherits the car after the registered owner’s death, decides to sell the vehicle, the ownership of the vehicle and the car insurance also need to be transferred to the new owner. This is an important step that needs to be carried out in order to complete the sale of the vehicle.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
FAQs
1. Do I have to keep the car after the death of the registered owner?
If you are the legal heir inheriting the car after the death of its registered owner, you have the choice of keeping or selling it.
2. Can I get the NCB transferred to my name without transferring the insurance?
No. You can only transfer the accumulated NCB to your name as the legal heir, given that you also successfully transfer the car insurance.
3. How long will the car insurance stay active after the policyholder’s death?
After the death of the policyholder, the car insurance stays valid for three months from the date of the insured’s demise or until the policy expiry date, whichever comes earlier.
4. When should I notify the RTO about the death of the car’s registered owner?
According to Parivahan Sewa, you need to notify the concerned registering authority about the owner’s death within 30 days if you want to use the vehicle for a period of three months.
5. If I don’t submit the proof of succession, can I still transfer the vehicle ownership to my name?
No. In order to transfer the ownership of the vehicle to your name, a number of documents need to be submitted, including the proof of succession.
