What Happens to the Car and the Car Insurance Policy When the Car Owner Dies?
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One of the saddest and inevitable occurrences in life is death. The death of a loved one causes unimaginable heartbreak to their surviving members.
Most times, sorting the auto insurance policy is usually the last thing on their minds. The good thing is car insurance companies have provisions for unfortunate events like the death of a family member. So, what happens to their car insurance policy when death happens? And what does it take to transfer the ownership of a car belonging to a family member that has passed on? Read on.
If There Is A Will – Apply for A Grant of Probate and Become an Executor of The Estate
If the late family member left a will, a family member or relative could apply to the court to become the person (aka ‘the Executor’) authorized and responsible for distributing the Estate according to the instructions left by the family member that passed away. This person, then can make help carry out the instructions to manage the car based on the wishes of the late member.
If There Is No Will – Apply for Grant of Letter of Administration
Because the deceased did not write a will (this is known legally as when the person died intestate) the possessions of the late family member (known as the ‘Estate’) is shared according to the dictates of the Intestate Succession Act*. The letter of administration, when granted will then allow the appointed person to deal with the deceased’s Estate based on the act. This appointed family member is called the “Administrator”
*The Intestate Succession act is where the state decides how the late person’s assets will be shared among his/her surviving members. Learn more about the Intestate Succession Act here.
Reach Out to The Insurance Company
The appointed family member chosen by the court with either of the above methods (the “Executor” or “Administrator”) can reach out to the insurance company the deceased was registered in, and understand the processes that are involved in handling the insurance policy.
Sometimes, the policy is transferable to the spouse, or the person registered as the next of kin on the policy. It all depends on what information is registered with the insurance company.
What to Do with The Car of The Late Family Member?
If they wrote a will before they passed on, they have likely bequeathed their car to a beneficiary. The Executor will see that the new owner gets the car according to the instructions on the will.
If there is no will, the Administrator* will distribute the Estate according to the rules of the Intestate Succession Act.
Before a car can be transferred, it must meet some criteria.
- The Letter of Administration or Grant of Probate is available.
- There are no outstanding loans or road tax arrears or any outstanding matters.
- The car is over three months old, registered under category A or B with a Certificate of Entitlement
There are some scenarios you must know when it comes to what to do with the car of the late family member.
If There Is an Outstanding Loan on The Car
They cannot transfer the car until they pay the outstanding loan of the car off. If the family member that died took out a car loan, they had not fully paid the car loan at the time of their death; it will be paid out of the deceased’s Estate.
But if they paid the car loan out of a joint account (usually the deceased and their spouse), the other account holder is liable to pay the loan balance.
If the Car Is on Hire-Purchase
If the dead family member took a car on hire purchase and upon his/her death, it was unpaid. The vehicle legally belongs, and it is returned to the hire-purchase company. The hire-purchase company will recover the car and put it on sale (if they want) to cover the loan balance.
If the sale of the car cannot offset the loan balance because of depreciation on the value of the car, then the balance will be paid out of the Estate.
If the new owner would like to transfer car ownership under their name, he/she could discuss with the hire-purchase company on how financial obligations on the car will be made.
How to Transfer the Ownership of A Deceased’s Car To The New One?
To transfer ownership, you apply by filling the Transfer Application Form (MO10).
The Transfer Application Form and the following documents should be available and submitted to the LTV (Land Transport Authority).
- The death certificate of the former car owner.
- Certified documentation of the Grant of Probate or the Letters of Administration or Letter from the Public Trustee.
- The original vehicle inspection certificate issued by an LTA-Authorised inspection Centre.
- The original motor insurance certificate (held by the new owner).
- The NRIC of the Administrator or Executor or the Employment/Immigration pass card issued by the Ministry of Manpower or the Immigration and Checkpoints Authority (ICA).
Thinking about what to do with the car of your loved one that has passed can be very hectic, but there are lawyers and government officials that can make the process a little easier. We hope you found this piece useful.