What Is a Policyholder?
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A policyholder, or policy owner, is the person who purchases and is covered by an insurance policy. For example, if you buy auto or homeowners insurance, then you will be listed as the policyholder. As the policyholder, it is your responsibility to pay premiums timely so that you can receive coverage when filing an insurance claim.
Keep reading to learn more about being a policyholder and the various insurance policies you can purchase.
What Are a Policyholder’s Responsibilities?
The policyholder's main responsibilities are to pay the premiums on time, along with:
- Completing the application with accurate information, with no false declarations or misleading statements
- Adding other drivers (car insurance), dependants (health insurance) or beneficiaries (life insurance)
- Following the insurer’s claims process
- Adding and dropping coverages
- Adding and dropping cars to a car insurance policy
- Canceling the policy
Once the insurance company approves an application, they give the policyholder control over the policy. Only the policyholder can make changes to or cancel the policy. One exception is if the policyholder designates an individual with power of attorney, which allows that person to make legal, financial and medical decisions on the policyholder’s behalf.
Can a Policyholder Be Changed After You Purchase a Policy?
For homeowners and auto insurance, you generally cannot change the policyholder after purchasing the policy. If you want someone else to be the policyholder, the insurance company will typically require you to cancel the existing policy and purchase a new one.
Transferring ownership of a policy may be possible with a life insurance policy. For example, parents can buy a life insurance policy for their child and then transfer policy ownership to that child when they turn 21.
Does a Policyholder Have To Be the Insured?
The policyholder is typically the insured, but not always. For example, if you buy a life insurance policy for your 12-year-old child, you are the policyholder and the child is the insured. However, if a business owner buys equipment insurance, they would be the policyholder and the insured. With homeowners and car insurance, you are always at least one of the persons insured.
How Many People Can a Policyholder Insure?
A policyholder can insure as many people as their insurer will allow under their policy. A car insurance company will typically require all household drivers to be listed in the policy. With homeowners insurance, coverage will typically extend to all household members.
However, some policies carry restrictions on who can be insured. People can age out of coverage eligibility on a life insurance policy, for instance. An insurance company may not allow a parent to include their child in their health insurance policy if they are 27 years or older.
Is Anyone Else Covered Besides the Policyholder?
An insurer can cover other persons besides the policyholder depending on the type of insurance policy. Let’s look at how this works with auto, home, renters and life insurance:
When purchasing an auto policy, the insurance company may require you to list all household drivers. The only exception is if a household member is specifically listed as an excluded driver. With a car insurance policy, the policyholder and all household drivers are insured when driving the insured car, unless they are excluded.
Many auto policies will insure people who drive your car with your permission, as well. Since car insurance typically follows the car, any driver you permit to drive your car that gets into an accident in your car may be eligible for coverage.
Your homeowners insurance policy provides coverage to all household members, which can include your spouse, children and even pets. For example, if a guest visits your home and your dog bites them, homeowners insurance may cover the injured guest’s medical expenses.
Unlike homeowners insurance, renters insurance will cover only the policyholder and not roommates, unless they are specifically added to the policy. Generally, roommates will need to purchase their own policy if they want renters coverage for their personal belongings and liability.
The type of life insurance plan you purchase will determine how many people are insured in the policy. For example, individual life insurance would cover a single person, while joint life insurance would cover two people — usually a married couple.
Policyholder Vs Insured Vs Beneficiary: How Are They Different?
Policyholders, insureds and beneficiaries may all be listed on a single policy but refer to three different things. Here’s how each works:
Person who pays the premiums, owns the policy and can make changes to the policy
Person who is covered by the policy, triggering a claim payout if the person experiences a covered event (e.g., death in the case of life insurance)
In life insurance, the person who receives the proceeds from a life insurance policy when the insured dies
In health insurance, the person who receives healthcare benefits
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