What Is a Policyholder?
Last Updated on February 28, 2021
A policyholder is the individual who has insurance coverage and is covered by that insurance.
If you have a car insurance or home insurance policy, for example, then you are the policyholder. You own the insurance policy and are protected according to the terms of that policy.
As the policyholder, you can extend coverage to new people on your policy, depending on your relationship. Your car insurance company might require you to list all drivers in your household, for example. If you get married, then your car insurance might require your spouse to be added to the policy.
Most auto insurance policies automatically cover all residents of your household who are related to you by marriage, blood, or adoption. These covered individuals won’t technically be policyholders, although they will be covered under the same policy as yourself as named, insured individuals.
As a home insurance policyholder, meanwhile, you should have coverage for your home and all items in your home. Your house is covered if it burns down in a fire, for example. Your TV will be replaced if it’s stolen during a burglary.
As a life insurance policyholder, your family will receive payout in the event of your death. You might list beneficiaries on your life insurance policy, and those beneficiaries will receive a payment if you accidentally die.
The policyholder controls the policy. The policyholder is responsible for paying policy premiums. The policyholder can make changes to the policy, cancel the policy, or renew it.
Who Else is Covered Besides the Policyholder?
An insurance policy might cover certain other individuals beyond the policyholder:
If you let your friend drive your vehicle to the mall, for example, then your car insurance will also extend to that friend regardless of whether or not you’re in the vehicle. When you let a friend borrow your insured vehicle, you’re not just lending your car; you’re also lending your car insurance.
Your car insurance will not extend to excluded drivers. You might choose to list certain members of your household as an excluded driver, for example, to prevent car insurance premiums from going up. If your husband has two DUIs and an at-fault accident on his record, for example, then you might list your boyfriend as an excluded driver, which means your boyfriend will not be covered by insurance while driving your vehicle.
Car insurance will also not extend to anyone who drives your car regularly and is not listed as a driver on your policy. If your friend borrows your car six days a week, for example, and you only drive your vehicle one day a week, then your friend is considered the primary driver of the vehicle and needs to be listed on the policy as such.
Aside from these unique situations, the policyholder’s car insurance will extend to anyone driving the vehicle with the permission of the policyholder.
A typical home or renters insurance policy, meanwhile, will automatically extend coverage to:
- Relatives living in your household
- Other people under the age of 21 in your care or in the care of a resident of your household who is a relative
Many home and renters insurance policies will also cover college students living away from home under the age of 24. If your daughter gets her laptop stolen while away at college, for example, then you may be able to make a claim under your home insurance policy.
Responsibilities of a Policyholder
As a policyholder, you have certain responsibilities to your insurance company, including:
- Providing all relevant and accurate information to the insurer for underwriting purposes
- Honoring the agreed terms of the contract
- Paying required premiums
As long as you meet these basic obligations, you should maintain continuous insurance coverage.
A Policyholder Can Also Be a Business or Other Entity
Up to this point, we’ve assumed the policyholder is an individual. You are a policyholder when you take out a car insurance or home insurance policy, for example.
However, policyholders can also be businesses or other entities. A corporation might have business insurance, for example, which means the business is a policyholder for a business insurance policy.
Put simply, a policyholder is any person or entity whose name appears on the records of the insurance form.