What happens to cars and auto insurance when the vehicles are in the deceased person’s name but a relative is driving them, including a financed or leased car titled with someone else? – North Carolina

Short Answer

In North Carolina, a car titled in the deceased person’s name is usually an estate asset, and the personal representative generally controls what happens to it (keep it, sell it, or distribute it) while also protecting the estate from liability. Auto insurance can become a problem quickly after death because the “named insured” has died, so the safest approach is to notify the insurer promptly and get written confirmation of who is covered while the estate is pending. If the vehicle is financed or leased, the lender/lessor’s contract rights still apply, and the estate (or the person keeping the car) typically must keep insurance in force and address the payoff/assumption rules.

Understanding the Problem

In North Carolina probate, what happens when a relative continues driving a vehicle that is still titled in the deceased person’s name, and how does that affect auto insurance coverage and liability? How does the answer change when the vehicle is financed or leased, or when the title is in someone else’s name even though the deceased person used or paid for the vehicle? The practical decision point is whether the estate (through the personal representative) can safely allow continued use of the vehicle while the estate is being opened and assets are being identified.

Apply the Law

Under North Carolina law, title to a motor vehicle can be transferred after death through the North Carolina Division of Motor Vehicles (NCDMV) using documents that show authority to act for the estate (or, in limited situations, an affidavit process). Separately, North Carolina’s financial responsibility laws require liability coverage in an owner’s policy to cover the named insured and, in many situations, permissive drivers using the covered vehicle with permission. Even when the law requires certain minimum coverages in qualifying policies, the estate still needs to confirm the policy remains in force and that the current driver is treated as an insured under the actual policy terms.

Key Requirements

Who has authority over the car: If the vehicle is titled in the deceased person’s name alone, it is typically controlled by the estate’s personal representative once appointed, subject to liens and the estate plan.
Insurance must stay in force: The vehicle should not be driven unless there is confirmed liability coverage for the current driver and use of the vehicle, and the insurer has been notified of the death and the estate’s plan for the vehicle.
Liens/leases still control key options: If the vehicle is financed or leased, the lender/lessor’s contract can limit transfers and may require payoff, assumption, or return of the vehicle, along with continuous insurance.

What the Statutes Say

N.C. Gen. Stat. § 20-77 (Transfer by operation of law) – Allows NCDMV title transfer when ownership changes by operation of law, including inheritance/devise, and describes documentation/affidavit paths in certain situations.
N.C. Gen. Stat. § 20-279.21 (Motor vehicle liability policy) – Defines required features of qualifying liability policies, including coverage for permissive users of the covered vehicle in many circumstances.

Analysis

Apply the Rule to the Facts: Here, the estate is being opened and the personal representative is working to identify and marshal assets for a plan that leaves assets to a family trust. Vehicles titled in the decedent’s name should be treated like other estate assets: the personal representative should locate titles, confirm liens, and decide whether the estate will keep, sell, or distribute each vehicle. Because a relative is driving, the key risk is an insurance gap; the personal representative should treat “confirm coverage in writing” as a first step before allowing continued use.

Process & Timing

Who files: The personal representative (or, in limited cases, heirs using an affidavit process). Where: North Carolina Division of Motor Vehicles (NCDMV) and, for estate authority documents, the Clerk of Superior Court in the county where the estate is opened. What: Title transfer paperwork and supporting documents (commonly including certified Letters and a certified death certificate; if no title can be found, a duplicate title request may be needed). When: As soon as feasible after appointment, after confirming liens and insurance.
Insurance step (do this early): Notify the auto insurer of the death, ask whether the policy remains active during administration, and confirm whether the relative driver is covered as a permissive user or must be added/rewritten under an estate or new owner policy. Keep written confirmation in the estate file.
Financed/leased vehicle step: Contact the lienholder/lessor to confirm payoff, assumption, or return requirements and whether the estate can keep the vehicle insured and stored/used while decisions are made. If the estate sells or distributes the vehicle, coordinate lien release or assumption before attempting final title transfer.

Exceptions & Pitfalls

“Permissive use” is not a substitute for confirming coverage: Even though North Carolina law requires permissive-user coverage in many qualifying policies, the safest practice is still to confirm the policy is in force after the named insured’s death and that the current driver and use are covered.
Title in someone else’s name: If the vehicle is titled to a different living person (or a leasing company), it may not be an estate asset even if the decedent used it. The estate may still need to address reimbursement claims, payments made, or personal property inside the vehicle, but title control usually follows the titleholder and contract documents.
Trust transfers can be harder at the counter: When a vehicle is being transferred into a trust or to a trustee, NCDMV documentation requirements can be more detailed and local offices may require extra review. Planning for extra time and having complete paperwork helps avoid delays.
Liens and missing titles: A recorded lien can block transfer until released or assumed, and a missing title can require a duplicate-title process before transfer. These issues often slow down estate administration if not addressed early.

Conclusion

In North Carolina, vehicles titled in the deceased person’s name are typically controlled by the estate’s personal representative, and they should not be treated as “family cars” that can be freely driven without planning. The key is to (1) confirm who has authority over the vehicle, (2) keep liability insurance in force with clear confirmation of who is covered, and (3) address any lien or lease restrictions before transfer. As a next step, the personal representative should notify the insurer and lienholder and then begin the NCDMV title-transfer process using the estate’s authority documents.

Talk to a Probate Attorney

If a vehicle is still titled in a deceased family member’s name and someone is driving it, the estate can face avoidable insurance and liability problems. Our firm has experienced attorneys who can help sort out title, lien/lease issues, and the steps to handle vehicles correctly during North Carolina estate administration. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.