What Is a Policyholder for Insurance: What You Need To Know

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When you’re shopping for car insurance or reviewing your current policy, you’ll likely come across the term policyholder. What does policyholder mean, exactly? The insurance policyholder is the person who owns the auto policy and is responsible for managing it, like paying premiums, updating coverage and canceling or renewing the policy.

Here’s what you need to know about what it means to be a policyholder, how it differs from being just a listed driver and why it matters when it comes to your coverage and responsibilities.

What is a policyholder for insurance?

A policyholder is the person who owns the insurance policy. In the case of car insurance, the policyholder is the individual who signs the application, purchases the policy, pays the premium and has the legal authority to make changes, including adding or removing drivers, vehicles and coverage, and canceling the policy.

The policyholder is usually the person who owns the vehicle being insured. In some cases, the policyholder is only the named insured of a non-owner policy, which provides coverage for driving any vehicle the policyholder drives because they don’t have a vehicle in their name.

A policyholder’s responsibilities also include ensuring the policy stays active and that all information is accurate and truthful. Any lies or omissions in the application, or fraudulent claims, like inflating damages or injuries after an accident, can be considered insurance fraud. Since the policyholder signs the agreement, they’re ultimately responsible for any consequences.

What’s the difference between a policyholder and a listed driver?

A policyholder is the owner and decision-maker of the insurance policy. A listed driver, on the other hand, is someone who’s allowed to drive the insured vehicle and is covered by the policy but doesn’t have control over it.

For example, your teen driver is a listed driver when they get their license. They are insured to drive the car and covered in case of an accident, but they can’t make changes to the policy or cancel it.

Can there be more than one policyholder?

Yes, in some cases, there can be more than one policyholder on an insurance policy. For example, if you and your spouse or domestic partner co-own a vehicle, you can both be policyholders and named insureds on the policy. You can also get a joint auto policy with someone else if you buy a vehicle together. So, if you purchase a vehicle with your child, and you’re both on the title, then the policy would be in both names.

Keep in mind, there are differences between co-borrowing and co-signing a vehicle. Co-signing means you don’t have legal rights to it, while co-borrowers do and need to be listed as a policyholder on the policy.

How the policyholder can affect rates

Insurers consider many factors when determining the cost of car insurance, including the policyholder’s age, gender, driving record, credit history and location. Keep in mind that some of these factors are limited or prohibited from being considered in some states.

Auto insurance rates are typically cheaper for older, more experienced drivers than young drivers. Policyholders will also usually get lower rates with a clean driving record compared to a similar-aged policyholder with tickets or an at-fault accident.

Listed drivers also affect premiums. Adding a teen driver can cause a significant jump in your car insurance costs, but it’s usually cheaper than them getting their own policy (which they can only do after they turn 18 anyway).

How to determine what types of coverage you need as a policyholder

Although almost all states have minimum coverage requirements and you cannot purchase less car insurance than your state requires. However, you get to pick which additional coverage you buy and the limits you need. As you shop for the best car insurance policy, here’s a quick look at specific coverage types, both mandatory and optional:

Let’s look more closely at these options:

• Liability coverage
  

  Most states require this type of car insurance. You will most likely need to purchase minimum limits of both bodily injury and property damage liability coverage to legally drive in your state. Bodily injury liability helps with someone else’s medical expenses if you hurt them in an accident. Similarly, property damage liability helps with the other driver’s property damaged by you in an at-fault accident. That means it can help pay for repairs for another driver’s car, or even to repair your neighbor’s garage after accidentally backing into it, for example.

• PIP
  

  Some states require personal injury protection (PIP), which is considered no-fault coverage, while it is optional in others. Although many think no-fault means no blame is assigned in an accident, it actually refers to how insurance kicks in after an accident to pay for things like medical expenses or lost wages.

  Regardless of whether you are at-fault for an accident, PIP can cover medical expenses, lost wages or essential services required due to injuries sustained by you or your passengers in the accident.

  In states where PIP isn’t a requirement or an option, medical payments coverage is another option. It doesn’t include coverage for lost wages or essential services like PIP, but it will cover medical expenses for you and your passengers if you get hurt in an accident, regardless of who is at fault.

• Comprehensive coverage
  

  If you own your vehicle outright, comprehensive is optional. However, you may want to consider adding it if you don’t currently carry it on your policy. After all, your car is not only at risk when you are driving. If a large tree limb falls on it overnight or someone steals it, your comprehensive coverage could help with the resulting expenses up to your policy limits.

• Collision coverage
  

  You might have noticed that liability coverage only pays claims to the other parties involved if you are at fault in an accident. If you want coverage for your vehicle, you will need to add collision. Collision coverage pays to repair or replace your car if you are in an accident. As with comprehensive, collision is optional if you aren’t financing or leasing, and a deductible usually applies.

  Lenders and leasing companies typically require comprehensive and collision until you pay off the loan or lease. Your lender may have higher minimum requirements than your state, and may have a cap on how high your comprehensive and collision deductibles are.

• Uninsured and underinsured motorist coverage
  

  Some states require uninsured and underinsured motorist coverage as part of minimum coverage requirements. Even in states that don’t require it, this optional coverage may be worth the cost. The required type of uninsured or uninsured motorist coverages usually refers to the insurance that covers injuries caused by an uninsured or underinsured motorist. In some states, these same types of coverage are available for property damage as well.

  Without this insurance coverage, you may have to pay out of pocket for these expenses if an uninsured or underinsured driver hits you, even though you weren’t at fault for the accident.

• Other coverage types
  

  This is by no means a comprehensive list of available auto insurance coverage types. For additional financial protection on and off the road, you might want to add other types of coverage, like roadside assistance, rental reimbursement or gap insurance.

Can a policyholder be changed after you purchase a policy?

Technically, no — you cannot change who the policyholder is after you purchase a policy. There are times, however, when you may need your policy to reflect a different person as the policyholder. In this case, your insurance company will cancel your current policy and rewrite it in the new policyholder’s name. Some examples of when this could happen include:

• Selling your vehicle: When you no longer need to insure a car because you have sold it, you can contact your insurance company for the steps necessary to cancel your policy. Your vehicle’s buyer will then be responsible for buying insurance in their name. Some states require you to cancel your registration before canceling the policy. Otherwise, you risk incurring fines for a lapse of insurance.
• Death of a policyholder: If the car policyholder dies, their insurance needs to be canceled and rewritten for the vehicle’s new owner. Do note that some insurance companies will require a death certificate or executor of estate paperwork to make changes to the policy.

Frequently asked questions

• Why aren’t all the drivers listed on my policy shown on my ID cards?
  

  Most insurance companies only list the policyholder on the insurance card. Drivers on the policy are still covered, but you can usually only see the listed drivers on the auto declarations page or the full policy contract.

• Can I allow an additional driver to make changes to my policy?
  

  You will need to contact your insurance company for more information if you’d like to grant permission for a listed driver to make changes to your policy. They may be able to document your file with third-party permission so that the additional driver can make policy changes on your behalf, but each company has its own procedures.

• Is the policyholder the same as the named insured?
  

  Yes, the policyholder is the same as the named insured. The named insured is another way of saying policyholder.

• Can an auto insurance policy have two policyholders?
  

  Yes, an auto insurance policy can have two policyholders. In fact, it’s common for spouses or domestic partners to share a policy, with both parties listed as policyholders.

• What is the best car insurance company?
  

  There is not a single best car insurance company for everyone. Knowing no two policyholders are alike, many car insurance companies try to differentiate themselves by catering their insurance offerings to certain customers. For example, one company may offer hefty safe-driving discounts to attract drivers with good records, while another prides itself on offering the cheapest rates. With this in mind, you’ll want to shop around, review discounts and compare offers to find the provider that is most aligned with your coverage needs and budgetary goals.