What is a Policyholder? Example and Definition
EA
Summary:
A policyholder is the owner of an insurance policy. Every type of insurance requires a policyholder to manage the coverage and pay premiums. A policyholder can include their household in the insurance coverage. Policyholders should speak with their insurance provider to make sure that they have sufficient coverage.
Whether you’re buying a new property and planning for the future, insurance provides protection over various damages. Different insurance policies cover different instances, such as car accident repairs, flood water damage to a house, or financial loss after a death in the family.
When you buy a policy, you’re a policyholder. Policyholders are important players in the world of insurance. They stand for their household by managing their coverage and making timely premium payments. Keep reading to learn more about how policyholders work.
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What is a policy holder?
A policyholder is a person or entity who owns an insurance policy. As a policyholder, your name is on the insurance documentation and you are insured under the policy. Typically, only the policyholder can make changes to his or her insurance contract. Policyholders are also subject to contractual responsibilities of their policy.
There are several roles associated with insurance coverage. Let’s look at a few common insurance terms and what sets a policyholder apart from them.
Policyholder vs. insured
A party labeled “insured” is covered by an insurance policy. Most policyholders are insured, but not all insured are policyholders. Policyholders own and control policies. Only policyholders can make changes to the policy and pay premiums.
There may be multiple policyholders and multiple insured under one policy, but this depends on the type of insurance and the policy. We’ll touch more on that later.
Policyholder vs. insurer
The insurer is the insurance company. Policyholders purchase insurance protection through insurers.
Policyholder vs. beneficiary
“Beneficiary” is a role reserved for life insurance. Beneficiaries are the recipients of life insurance benefits. A policyholder can be a beneficiary, but not all beneficiaries are policyholders. The policyholder on a life insurance plan is responsible for naming beneficiaries and designating their payout.
Policyholder vs. listed driver
A car insurance policyholder can add other drivers to their policy. Typically, families or couples get one auto policy that covers all drivers. Some car insurance policies allow multiple policyholders. However, additional policyholders must meet certain requirements.
If drivers don’t meet policyholder criteria, they can still get coverage from the policy. In this case, they are called listed drivers. A listed driver doesn’t have the same rights as a policyholder, but they benefit from the same coverage. Listed drivers are often adolescent drivers covered under their parents’ policy. Listed drivers are also sometimes referred to as insured.
How do policyholders work?
The policyholder on insurance is the owner of an insurance policy. You, the policyholder, insure yourself and your loved ones so that you are protected from potential risks. Policyholders and insured can look slightly different depending on the type of insurance.
Renters and homeowners insurance
Homeowners and renters insurance protects your home and its contents. If injury, theft, property damage, or some other incident occurs, homeowners or renters insurance can reimburse losses.
Rental and home insurance are typically the most comprehensive forms of insurance. This means that the policyholder and their immediate family members living in the same household are insured, and thereby covered by the insurance policy. It’s the policyholder’s responsibility to make sure that the coverage is large enough to reimburse everyone’s property.
If you’re looking for better homeowners insurance coverage, take a look at some of the policies below.
Car insurance
Most states require drivers to carry car insurance. Auto insurance policies protect insured persons should a car-related accident occur. An insured person on a car insurance policy is either a policyholder or a listed driver. Unfortunately, most policies won’t let you insure a car you don’t own.
Listed drivers cannot change the coverage nor can they add other listed drivers to the policy. If a listed driver needs to file a claim, a policyholder may need to authorize the claim.
If you have yet to get auto insurance, or want to find a more comprehensive policy, you may want to consider one of the following options.
Life insurance
Life insurance is a unique type of insurance in which the policyholder may not be the insured. There are several types of life insurance with different policy limits, terms, and coverage. A life insurance policy benefits the loved ones of someone who passes. As such, a loved one is usually the policyholder of a life insurance policy.
For example, a husband may buy life insurance for his wife. The husband is the policyholder and the wife is the insured. As the policyholder, he may choose to designate their children as beneficiaries. When his wife passes away, the children receive the death benefit payout as governed by her life insurance policy.
To ensure your loved ones are provided for even after you pass, you may want to review some of the policies offered below.
Who else is covered on your insurance policy?
You aren’t covered on an insurance policy unless the policy explicitly lists your name or your association with the policyholder. If you are the policyholder and need an additional person covered by your policy, you can usually add them as long as they meet your provider’s criteria. Speak with your insurance company to make sure you have the coverage you need for the people included.
Can you change policyholders?
Policyholders must manage their insurance policy by controlling their coverage and paying premiums. If they can’t do so for some reason, it is possible to change policyholders.
Changing policyholders usually entails notifying your insurance company and filling out some paperwork. Here are a few cases in which one might need to transfer policyholder responsibilities to someone else.
- Short-term policyholder change. A temporary transfer of insurance is most common with car insurance. Sometimes, when someone sells their car, they want to grant insurance to the new driver until he or she gets a policy of their own. If you find yourself in this situation, call your insurance agent to work the situation out.
- Policyholder death. When a policyholder passes away, they can no longer fulfill their responsibilities. Most insurance policies have terms and conditions in place for these situations. It should be easy and simple to get a policy transferred to a family member or spouse.
- Ownership transfer. A policyholder might simply want to transfer the ownership responsibility to another person, such as a spouse. In this case, all you have to do is call the insurance company to initiate the process.
Pro Tip
If you choose to change policyholders, it’s important to make sure that the former policyholder stays on the policy so that they are still covered.
FAQs
What is a policyholder example?
Terry and Frank buy a new home for themselves and their three kids. Frank buys a homeowners insurance policy that covers Terry and the kids. Frank is the policyholder, while Terry and the kids are the insured.
How do I know if I’m the policyholder for my insurance?
If you bought your insurance policy, you are the policyholder. Your name is on all documentation, and you are responsible for making payments. If you are confused or unsure, call your insurance agent to confirm whether you are the policyholder.
Is the policyholder the owner?
Yes, the policyholder is the owner of the insurance policy.
Who can be a policyholder?
Different types of insurance and different insurance providers have different requirements for who can be a policyholder. At a minimum, policyholders must be 18 years or older.
Keep in mind that the riskier a policyholder appears to insurance companies, the more expensive their premium costs will be. Check with your prospective insurance providers to find out what yours are.
What is another term for policyholder?
Another term for a policyholder is “policy owner.”
Key Takeaways
- A policyholder owns the insurance policy and can be a person or an entity. Some types of insurance policies allow multiple policyholders.
- Policyholders are in charge of paying premiums and making any changes to the policy. This doesn’t mean that others can’t be covered under the same policy. Other people or entities covered by an insurance policy are called insured.
- You can change policyholders temporarily or permanently by contacting your insurance company and filling out some paperwork.
Choosing the right insurance provider
Finding the right insurance provider for you can be difficult. You should consider a few reputable insurers before making your decision. Compare coverage, fees, premiums, and conditions and go with the one that best fits your needs and budget.
Use SuperMoney’s comparison tools to narrow down your search. We have comparison tools for auto insurance, homeowners insurance, life insurance, travel insurance, and more.
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