Losing a loved one is a heartbreaking experience that can be made even more difficult by complicated administrative tasks.
The next of kin, executor, or estate administrator must consult the deceased's will, compile an inventory of their properties and debts, pay creditors and taxes, and remit the deceased's property to the rightful owners. On top of this, contrary to what one might think, home and auto insurance policies are not automatically cancelled when the insured dies because their vehicle and home still need to be covered.
"Insurance is there to protect you and your property," says Pete Karageorgos, the Insurance Bureau of Canada's director of consumer and industry relations. "If they've passed away, any property that the individual has insured would go to their estate."
Here's what you need to know if you’re appointed to sort out a late loved one’s insurance policies.
If the deceased had car insurance, it is possible to cancel it at any time by sending a cancellation notice to the insurance provider. However, it's best not to cancel the policy right away. First, you must cancel their driver's licence by contacting your province or territory's ministry of transportation. Next you will need to transfer ownership of the vehicle to yourself or the buyer, if you have one.
"If someone passes away, the car would likely remain in their name until the estate has been settled," says Matthew Johnson, customer care manager at Sonnet Insurance Company. "Most of the time, it would also need to remain covered under the policy."
At Sonnet, you have the option to ask to be listed as the named insured during this process to ensure the property and liability is adequately covered.
“If there is no will for the deceased customer, the spouse will be deemed to be the insured under the Insurance Act,” adds Johnson.
Once you’re ready to make changes to the policy, the insurance provider will need documentation, such as a death certificate, notarized declaration of heirship, or executive of the estate document.
If your name is also listed on the policy, then the auto insurance will continue to be valid even after the policyholder's death — as long as the premiums are paid. If you’re not listed on the policy, then you’ll need to set up one of your own. Even if you plan to sell the car later, you can add it to your current insurance policy if the ownership of the vehicle is being transferred to you.
"When the estate is settled, and the vehicle is in a different name, the customer would need to create a new policy under their name as they are now an owner," says Johnson. "We cannot change the name on a policy."
Depending on the province you live in, you'll need to consult with either a private insurance provider, or a publicly run insurance provider. For example, car insurance in Ontario is privately run, while car insurance in British Columbia is managed by the government.
When the primary home insurance policyholder dies, their insurance policy doesn't automatically terminate. For coverage to continue, the estate must continue to pay the deceased's insurance premiums. Like car insurance, home insurance policies can be cancelled at any time with a cancellation notice.
"The policy would need to remain active if the insurance is still being used," says Johnson. "The estate is liable for any claims if the owner has not yet been transferred."
When you inherit a home, the previous owner's insurance policy does not automatically pass to you; you'll have to get your own home insurance.
Bear in mind that the amount of coverage you buy should represent the home's value and contents. For example, depending on how your loved one's estate was divided after their death, you might have inherited more or even fewer assets. This will influence the amount of coverage you need if you become the owner of the home and impact the cost of your home insurance.
It’s your responsibility to ensure that your coverage is adequate, so keep track of how much the home and personal belongings are all worth. And if the home will no longer be owner-occupied — i.e. it’s empty or being rented out — the policy will still need to be updated.
When establishing a life insurance policy, the owner names one or more beneficiaries who will receive the death benefit. As is the case with home and car insurance, life insurance plans do not immediately payout after an insured individual dies.
To begin the process, contact the deceased’s insurance provider and inquire about the conditions for receiving the death benefit. In most cases, you'll need to file a benefit request (usually a form).
And according to Canada's Financial Consumer Agency, you'll most likely need the following details:
- insurance policy number
- a claims form from the insurance company
- a copy of the death certificate
"We take security very seriously with insurance policies," says Johnson. "And as such, we are only able to speak to customers who have provided the correct documentation."
You can also contact the insurance provider to amend your own policy, if for instance you and the deceased had joint life insurance or they were listed as a beneficiary on your own insurance. You may need to adjust the beneficiary information and the amount of coverage the policy provides.
If you can't find the deceased’s life insurance policy information, the OmbudService for Life & Health Insurance has a tool that can help you search for it.
Being an executor comes with a lot of responsibilities. It’s best to call the deceased's insurance broker or agent as soon as you can and they will walk you through the process.
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