Among the many things to consider when you are buying auto insurance, your insurance provider will also ask you to make distinctions between the different people on the policy. Specifically, some people will be called the policyholder (or policy holder), while others will be named as listed drivers.
It is important for policyholders to understand their responsibilities as they are accountable for the insurance premium. You may be wondering what a policyholder is, or maybe even who can be one. Knowing the answers to these questions can affect everything from the amount you pay for auto insurance to your ability to adjust your policy.
What is a policyholder?
In the insurance world, a policyholder — which you may also see written as “policy holder” (with a space) — is the person who owns the insurance policy. As a policyholder, you are the one who purchased the policy and can make adjustments to it. Policyholders are also responsible for making sure their premiums get paid.
There are multiple ways to be a car insurance policyholder. With homeowners insurance, the policyholder is the homeowner. With renters insurance, it’s the renter. But with auto insurance, you cannot assume that the policyholder is the car owner since you can have a policy without owning a car.
So what is a policyholder when it comes to car insurance? If you bought the auto insurance policy, you are the policyholder. However, that does not necessarily mean you are the only one covered. You can extend your policy to cover all vehicle owners and, in most cases, blood relatives who live with you. Covered individuals who are not policyholders are typically called listed drivers.
What’s the difference between a policyholder and a listed driver?
Policyholders buy and manage the insurance policy, including adjusting coverage as needed. Most auto insurance policies allow for multiple policyholders so that spouses and partners can hold the policy together.
But other drivers can be protected even if they do not meet the policyholder definition. These are called listed drivers. A teenager who recently received their license is probably a listed driver and not a policyholder, for example. If that teen called the insurance provider and tried to change their auto insurance coverage, they would likely be unable to do so. That right is generally reserved for the policyholder.
How to determine what types of coverage you need as a policyholder
As a policyholder, you are responsible for making sure your policy offers the protections you need. As you shop for the best car insurance policy, there are specific coverage types you may want to include, namely:
|Coverage Type||What it Protects|
|Liability||This coverage steps in if you or a listed driver on your policy causes injury or damage to another party behind the wheel.|
|Personal Injury Protection (PIP)||This coverage helps pay for medical costs if you or any of your passengers get hurt in an accident.|
|Comprehensive||This coverage steps in for non-driving incidents such as theft, vandalism or falling objects.|
|Collision||This coverage helps pay to repair or replace your vehicle after an accident.|
Let’s look more closely at these options:
Most states require this type of car insurance. You will most likely need both bodily injury and property damage liability coverage to legally drive in your state.
Bodily injury liability helps with medical expenses if you hurt someone in an accident. Similarly, property damage liability helps with any property damaged 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.
Some states require PIP, which is considered no-fault coverage. Regardless of whether you are at-fault for an accident, it can cover medical expenses for injuries sustained by you or passengers of your vehicle. PIP can also help with lost wages if you or one of your injured passengers is unable to work for a period of time following the accident.
This is an optional coverage, but you probably want to get it. After all, your car is not only at risk when you are in drive. If a large tree limb falls on it overnight or a thief nabs it, your comprehensive coverage will help with the resulting expenses, up to your policy limits.
You might have noticed that if you cause an accident, your liability coverage only helps the other injured parties involved. In these cases, you will want to consider collision coverage — another optional coverage — to help repair or replace your vehicle. Again, your policy limits will apply here, so it is generally recommended to buy enough collision coverage to replace your car if it gets totaled.
This is by no means a comprehensive list of available auto insurance coverages. For additional protection on and off the road, you might want to add other types of coverage, like roadside assistance, uninsured motorist or gap insurance.
What if the policyholder needs to change?
Because being the policyholder requires you to manage your coverage and pay for the premiums, those responsibilities may need to shift at one point or another. It might make sense to chance the policyholder in the following cases:
- Short-term transfer of insurance: When you are selling your car, you may want to transfer your policy to the new owner so they can legally drive the vehicle. This buys them time so they can still take the wheel without setting up a policy of their own right away. The assumption is that they will set up their own insurance policy shortly.
If you are about to sell your vehicle, call your insurance company to see if they recommend a temporary transfer and, if so, how they handle it.
- Transfer of ownership: You might want to transfer ownership of your policy at some point. Maybe you were the one handling the premiums, but now your partner wants to take it on. If you want to transfer your policy to someone new, you should call your insurance provider to walk you through the process. Just make sure you stay on the policy as a listed driver if you want to remain insured.
- Death of a policyholder: If your policyholder passes away, you will need to get the policy transferred to you or another household member. Generally, your insurance provider should be able to transfer the policy to you fairly easily.
Every protected driver on an auto insurance policy gets listed on the policy, but they are not all policyholders. The simplest policyholder definition is the person who owns and manages the policy. This means policyholders can adjust coverage and are responsible for paying the premiums on time. The other listed drivers are insured under the policy’s coverages, but they are not responsible for controlling or managing the policy itself.