If the person who owns the car insurance policy dies, technically the policy ends and is no longer valid. However, if there is more than one name to the policy, then the other party must inform the insurance company as soon as possible.
In almost all cases, insurance companies are lenient, sympathetic, and helpful to the relatives, spouse, or children of the deceased. They will probably allow the policy to stay active for a short period to give the family enough time to sort out the details.
If the deceased co-signed the insurance policy with the spouse, the insurance company will simply transfer the plan to the living party. An insurance broker can work out the details quickly and finalize the insurance policy within a few days.
If the insured car is not to be used anymore for any reason, the policy should be terminated and the registration tags and license plates surrendered to the local DMV. If a member of the family would like to keep using the car, he should have the registration and ownership transferred to his name and then insured under his name.
Under no circumstances should the family retain the insurance policy under the name of the deceased because that could complicate the situation and even be used as cause for insurance fraud.
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