What Is an Auto Insurance Policyholder

Car insurance policyholders are almost always the vehicle owners who buy the coverage, responsible for premium payments, can make changes to policies including cancelling, submit claims, communicate with loss adjusters and receive settlement checks. The other people who live in the same household usually are included as listed drivers, who cannot make changes to policies and can be removed by the policyholder.

It is common for couples to jointly own auto insurance and both called policyholders or named insureds, which is another name for policyholder. A joint named insured cannot be removed from the policy without a clear consent. For example, one spouse cannot remove the other even if they are divorced unless the other gives consent, in most states.

Policyholder is the one who earns discounts for having continuous coverage or can carry accident-free records when buying another policy. Listed drivers don’t earn discounts for being listed on someone else’s policy. Also, auto insurance companies look at named insureds’ credit scores and often rate their driving records as more important than the listed drivers because they are assumed to drive the insured auto more.

However, driving records of the listed drivers are checked by insurers and considered in premium calculations. At times, they can be more influential, especially if the person is high-risk or a teenager. But a policyholder may be able to exclude a driver in the household from insurance, providing they meet certain conditions.

Those differences would clearly be marked on the policy declaration page. Listed drivers can still use the policy as proof of insurance because their names are written clearly.

There are situations where other people or companies may be listed on the policy as a named insured but they may not be the ones who bought and paid for the policy. For example, a lender or lessor may be listed on the policy as insured even though the policy is arranged by the borrower or lessee. In this example, any claim check would be paid to the lender or lessor and not the policyholder because of the contractual agreements in place between them.

Policyholders are normally owners of the vehicle because state rules require owners to insure their automobiles at least for Liability, if they are driven on the roads. But it isn’t always the case and they can be people or organisations, who don’t own the auto insured. In such cases, again the owner of the vehicle would be listed as the named insured and would receive any claim settlement because they have insurable interest in the car as the owner. This arrangement is in place to protect the vehicle insurance company against moral hazards so that someone else cannot insure someone else’s car, crash it deliberately and collect the payment.

For example, the executor of someone’s estate may have the legal responsibility to insure the automobile belonging to a deceased person for the benefit of the such person’s estate.

Policyholders’ names cannot be changed on policies, even though one of them may be removed in the above-described circumstances. For example, someone else cannot take it over when you sell it. It has to be cancelled and the new owner of the vehicle can take out new automobile insurance.

Since you have to pay the premium as the vehicle owner and policyholder, you should take your time to make sure you don’t pay more than you should. Get a few quotes and choose the best option. Also, you should make sure that the auto is never driven without insurance or by someone who isn’t covered by your policy. States will hold the vehicle owner responsible for the use of the automobile and purchase of liability coverage.