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Last updated: November 4, 2025
What Happens to Car Insurance When a Policyholder Dies?
Understand how death affects auto insurance coverage, and what to do if a loved one passes.
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When a car insurance policyholder dies, the coverage doesn’t immediately disappear. Instead, it goes into a transitional period. About 3 million Americans die each year1, leaving behind assets including vehicles. Knowing what happens to car insurance after death will make it easier for you in the long run.
In situations like these, being unprepared can lead to consequences, including legal liability and financial losses. That’s why we’ve created this guide to help navigate this process, from the immediate steps after a death to making the right policy changes.
What Happens to Car Insurance After Death
When a loved one passes, their insurance policy doesn’t end. Instead, their estate takes responsibility for the policy. Car insurance companies provide a grace period, which keeps the main policyholder’s car insured anywhere from 30 to 60 days (depending on the state).
TIP:
Contact the insurance company as soon as possible after the policyholder’s death. It’ll help you understand your coverage timeline and prevent insurance lapses for other drivers on the policy.
If you’re taking care of a loved one’s estate, you’ll need to handle payments for their policy. Automatic payments will continue until the bank freezes the account — which usually happens after the bank gets notice of their passing.
Avoid a coverage lapse by switching to manual payments. This will keep the vehicle insured so you can figure out how to handle the policy. Most insurers are willing to adjust billing or set up temporary payment options.
Is the Policy Still Active?
During the grace period, certain drivers benefit from the main policyholder’s coverage. This includes drivers who received permission from the main policyholder to use the vehicle. However, insurers may scrutinize claims more carefully if the driver wasn’t on the policy before.
Should I Transfer the Policy or Get a New One?
When you inherit a car, you may wonder whether it’s better to transfer the current policy or get new coverage. The answer is that it depends.
When to Transfer the Previous Policy
If you’re a spouse of a deceased policyholder, your coverage will continue as long as you’re also insured on the policy. You’ll need to call your provider to remove your spouse and make you the main policyholder. To have car insurance transferred to you, you’ll need to gather some important documents.
These include:
- Death certificate
- Vehicle title
- Your driver’s license
- Letters testamentary (if applicable)
- Proof of relationship to the previous owner
Your insurance company might also require state-specific documentation. Start early and contact your provider right away, since gathering documents can take several weeks.
Getting a New Car Insurance Policy
Meanwhile, if you’re a relative inheriting a vehicle and weren’t listed on the policy, you’ll need to get your own. In some cases, getting a new policy can be more affordable than transferring the previous one. Compare quotes from at least three providers to find the best rate.
TIP:
If you inherit a car and have your own existing policy, contact your current insurer first. You’ll usually get better rates by adding a vehicle to an existing policy (especially through a multi-vehicle discount).
How to Deal With Vehicles With Loans or Leases
If the deceased policyholder had a loan or lease on their vehicle, it continues after they die. Lenders and leasing companies require full coverage, so whoever inherits the car needs to keep maintaining them.
About 80 percent of new cars and 38 percent of used cars were financed in the first quarter of 2025.2 If you inherited a financed vehicle, get in touch with the lender to explore your options. Some lenders may let you take over the loan, while others might require full repayment. Their terms will determine what coverage you’ll need.
TIP:
If the deceased policyholder had credit life insurance or loan protection insurance, these policies can pay off the car loan.
Conclusion
After someone passes away, the priorities for their car insurance are: keep coverage active, inform the insurance company, and decide whether to transfer or replace the policy.
Insurers often grant a grace period after a policyholder’s passing. Make sure to contact the provider within this time to prevent coverage lapses — rules can vary by state and insurance company. Reach out to the insurer, the estate’s attorney, or your state insurance department for guidance if you have questions.
Frequently Asked Questions
Should you cancel car insurance when someone dies?
You should not cancel car insurance when someone dies. The policy usually stays in effect for 30 to 90 days after they pass away, as long as premiums are paid. This provides time for the deceased person’s estate to determine what to do with the vehicle.
Can you legally drive a deceased person's car?
You can legally drive the vehicle if you were given permission from the deceased. If you aren’t listed on the deceased’s policy, you should get a new policy as soon as possible.
Who pays the car insurance after someone dies?
The deceased’s estate is responsible for paying car insurance premiums until the policy is transferred or canceled. The executor typically makes these payments from estate funds.
What happens if there's an accident during the grace period?
If the driver had permission to use the vehicle, the insurance policy will cover the accident as it would have before the policyholder’s death. However, the claim may get additional scrutiny from the insurer.
Can I get a refund on unused premiums after canceling a deceased person's policy?
Yes, most insurance companies give prorated refunds on unused premiums when a policy is canceled. The executor should request this refund in writing when formally canceling the policy.
Senior Staff Writer
Jacqueline Quach holds years of experience in content writing, blogging, and copywriting, and has a professional background in user experience design, helping clients and businesses develop their content strategy. Jacqueline writes for multiple brands and websites, empowering customers in their purchase process through content. She also contributes to Savings.com and has written for Angi and SeniorLiving.org. Her work has been featured on MSN.com and Dayspa Magazine. Jacqueline holds a B.A. in Communication Studies from the University of California, Los Angeles.
Citations
Mortality in the United States — Provisional Data, 2023. CDC. (2024, Aug 08).
https://www.cdc.gov/mmwr/volumes/73/wr/mm7331a1.htmOverview of Auto Finance in 2025. Mercer Capital. (2025, June 07).
https://mercercapital.com/overview-of-auto-finance-in-2025/
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