It’s not something that many of us like to think about, but what happens when someone dies as a result of a car accident. Even though it is not a pleasant topic, you should know what type of coverage you have when a death occurs as a result of a car accident.
What Happens To Car Insurance When Someone Dies?
If there is another driver listed on the car insurance policy, `they will be covered up until the time the policy is up for renewal. At that time the insurance policy will no longer be valid.
Does Car Insurance Pay For Funeral Expenses?
Depending on your insurance provider and the type of coverage you have the car insurance company may pay a portion of the funeral expenses.
What Is Not Covered In Car Insurance?
When a death occurs, an executor of the will cannot use the vehicle for personal use. However, they can drive the vehicle to have it repaired for purposes of the will.
What Type of Insurance Pays a Death Benefit To Pay For Funeral Costs?
Some of Ontario’s mandatory insurance coverage will pay a death benefit. Ontario accident benefits portion of your car insurance covers death and survivor benefits.
What Does The Insurance Company Do When The Insurance Policyholder Dies?
When an insurance policyholder dies, and there is another driver listed on the policy besides the deceased policy owner, that person is insured to drive the vehicle until the insurance policy comes up for renewal.
Ontario Accident Benefits
Accident benefits coverage in Ontario is mandatory. Every car insurance policy in Ontario must include accident benefits. There are standard accident benefits and some optional accident benefits.
Statutory Accident Benefits
Statutory accident benefits are in place to pay for car accident injuries and death in Ontario. These benefits will cover costs that are not covered by the Ontario Health Insurance Plan. The statutory accident benefits are also in place to cover other expenses and income replacement. The Statutory Accident Benefits Schedule follows the no-fault insurance plan that Ontario has. The Statutory Accident Benefits are regulated by the Ontario Insurance Act. All Statutory Accident Benefits claims are resolved by the Automobile Accident Benefits Service of Ontario. Benefits that are available under the Statutory Accident Benefits include:
- Death and funeral benefits
- Medical and rehabilitation benefits
- Income replacement
- Attendant care benefits
- Non-earner benefits
- Caregiver benefits
- Childcare expenses for stay at home parents if they are unable to take care of their children
- Housekeeping costs
- Injured person assistance costs
- Repairs or replacement of eyeglasses and other items damaged in the accident
Additional optional coverage is also available to provide coverage for indexation and dependent care.
Part V – Death and Funeral Benefits
Under the Statutory Accident Benefits Schedule, the insurer of an injured person who dies as a result of a car accident must pay death benefits within 180 days after the accident or within 156 weeks after the accident if the injured person was continuously disabled as a result of the accident prior to their death. The following payments must be made under the death benefit:
A payment of $25,000 to the eligible spouse of the deceased or the amount of the purchased optional death and funeral benefit.
Payment to each of the deceased person’s dependents and to any persons the deceased had a financial obligation to pay support under a court order or domestic contract of $10,000 or the amount fixed by the optional death and funeral benefit purchased.
If there was no current spouse that received the $25,000 or optional death and funeral benefit fixed amount, the sum is to be divided between the dependents of the deceased and to anyone the insured had a financial responsibility to through court order or domestic contract.
A payment of $10,000 to each former spouse of the insured person when the insured person had a financial obligation to pay support under a court order or domestic contract.
As well as other payments set out in the Statutory Accident Benefits Schedule.
The insurer will pay a funeral benefit for the insured person who dies as a result of a car accident. The amount paid will not exceed $6,000 unless the insured person purchased additional optional death and funeral benefits, then the fixed amount of the optional benefits would be paid for funeral benefits.
What Is The Maximum Optional Death and Funeral Benefits That Can Be Purchased?
When purchasing optional insurance for death and funeral benefits you should check annually to see if the covered amount has increased to be eligible for the maximum optional death and funeral benefits. Currently, in Ontario, the maximum optional death and funeral benefits will pay $50,000 to an eligible spouse and $20,000 to each eligible dependent. The funeral benefit maximum under optional death and funeral benefits is currently $8000.
What Happens If the Funeral Benefit Doesn’t Cover The Full Cost of The Funeral?
If the deceased person’s car insurance policy does not cover the full amount of the funeral expenses, the executor or person paying for the funeral can apply for the Canada Pension Plan death benefit if the deceased person was a CPP contributor. The one-time lump sum will be paid to the estate of the deceased person. If no estate exists the money will be paid in the following prioritized order to:
- The person that is or is responsible for paying for the deceased person’s funeral expenses
- The surviving spouse or common-law partner of the deceased person
- The next of kin of the deceased person
Eligibility To Collect The CPP Death Benefit
The deceased person must have made payments to the Canada Pension Plan for a minimum of ⅓ of the calendar years in the period they contributed for the base CPP for a minimum of 3 calendar years, or the deceased person must have made CPP contributions for 10 calendar years.
There is a flat rate that the Canada Pension Plan pays out for funeral expenses. Car insurance funeral payments may affect this amount.