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What Happens When a Car Owner Dies?

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 A person signing paperwork next to a car key

When a car owner dies, there may be many outstanding questions:

  • Did they leave a last will and testament?
  • What happens to the car loan?
  • What happens to the car’s insurance?

The process may vary depending on a number of factors, including state policy, but our Madison dealership is eager to help any auto-owner in our community, including their loved ones.

Transferring Car Ownership After Death

Several states have community property rules, which means a deceased car owner transfers ownership to the surviving spouse, as the car was their property. Transferring the car title may be more complicated, especially if the car owner didn’t leave a last will and testament, specifying what happens to the deceased person’s assets. Depending on location, the state probate court may have to determine who can transfer the title, which may take several months.

What Happens to a Car Loan When the Owner Dies?

Any outstanding auto loans remain even if the car owner passes away, as any debts the person owed in life would still need to be paid. Car loans may have a death clause that lays out the repayment process if the borrower dies, and if a will was left, the heir(s) may inherit the vehicle and associated loan.

While state laws and loan terms vary, sometimes the surviving co-signer on the car loan or the borrower’s estate is responsible for the remaining auto loan balance. The estate is a deceased person’s total net worth, including savings, investments, real estate and other assets, in which case the estate may need to sell assets in order to pay the auto loan.

The lender may require refinancing on a deceased person’s auto loan after the original borrower’s death, and if there’s no one to make payments or the estate cannot satisfy the loan, the lender may repossess the vehicle.

Close-up view of a car key fob, a pen and signature on paper

What Happens to Car Insurance After a Car Owner Dies?

This process may differ due to varying policies, but the best thing to do is to contact the insurance company and ask them about the next steps. If the surviving spouse or estate executor inherits the auto policy, it’s important to specify which driver is covered by the insurance. If the policyholder changes, the car insurance premium and discounts may also be altered.

If canceling a deceased car owner’s auto policy, you should still reach out to the insurance company, who may require a death certificate copy and documentation to show who the estate executor is to prevent fraud. If you have any questions, we’re more than willing to help. Just contact us online at Smart Toyota.

About Smart Motors

Founded in 1908 by O.D. Smart, Smart Motors is one of the nation’s oldest automotive dealerships, is the mid-west’s largest hybrid dealer, is Wisconsin’s Largest Toyota Certified Used Vehicle dealer and one of Wisconsin’s largest volume new Toyota dealers. Located in Madison Wisconsin, Smart Motors is Wisconsin’s only two-time President’s Cabinet Award recipient from Toyota Motor Sales for superior customer service & sales volume. More about Smart Motors.

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