The Bankrate promise
At Bankrate, we strive to help you make smarter financial decisions. To help readers understand how insurance affects their finances, we have licensed insurance professionals on staff who have spent a combined 47 years in the auto, home and life insurance industries. While we adhere to strict , this post may contain references to products from our partners. Here's an explanation of . Our content is backed by Coverage.com, LLC, a licensed entity (NPN: 19966249). For more information, please see our .
Knowing the technical terms used in an insurance contract can be daunting if you aren’t an agent yourself. For instance, what is the difference between a policyholder and a listed driver? This question is an important one when it comes to understanding how your car insurance contract works.
Policyholders can affect how much the car insurance costs, who can make policy changes and when those changes occur. Bankrate has broken down exactly what a policyholder is so that you can better understand your role as it applies to your insurance contract.
What is a policyholder?
A policyholder (or policy holder) is the person who owns the insurance policy. In most cases, the policyholder is the only person who can change the policy. The policyholder is also the person that is responsible for making sure premium payments are up-to-date. Along with the policyholder, your contract may also list additional drivers. An additional driver is anyone other than the policyholder who is covered to drive.
When you are the owner of a vehicle, it is typically considered to be your responsibility to ensure the vehicle is insured. That’s why, in most cases, the policyholder is the vehicle’s owner. However, you can still be the policyholder even if you do not own a vehicle in certain cases. For example, if you are the primary driver of a vehicle but you don’t own it, the insurance company may still require you to be listed as the policyholder. If you are in this situation, it is important to understand the policyholder is considered responsible for the premium payments, any cancellations and any policy changes.
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. PIP applies no matter who is at fault in the accident.|
|Comprehensive||This coverage steps in for non-driving incidents such as theft, vandalism or falling objects. Comprehensive also provides coverage if you hit an animal.|
|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 the others’ 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.
If you own your vehicle outright, comprehensive is optional. However, you may want to consider adding it if you don’t currently carry it on your policy. After all, your car is not only at risk when you are in drive. If a large tree limb falls on it overnight or someone steals it, your comprehensive coverage will help with the resulting expenses up to your vehicle’s value minus your deductible.
You might have noticed that liability coverage only pays claims to the other parties involved if you are at fault in an accident. If you want coverage for your vehicle, you will need to add collision. Collision coverage pays to repair or replace your car if you are in an accident. As with comprehensive, collision is optional if you aren’t financing or leasing, and a deductible usually applies.
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.
Can a policyholder be changed after you purchase a policy?
Technically, no — you cannot change who the policyholder is after you purchase a policy. There are times, however, when you may need your policy to reflect a different person as the policyholder. In this case, your insurance company will cancel your current policy and rewrite it in the new policyholder’s name. Some examples of when this could happen include:
- Selling your vehicle: When you no longer need to insure a car because you have sold it, you can contact your insurance company for the steps necessary to cancel your policy. Your vehicle’s buyer will then be responsible for buying insurance in their name. Some states require you to cancel your registration before canceling the policy. Otherwise, you risk incurring fines for a lapse of insurance.
- Death of a policyholder: If the policyholder dies, their insurance needs to be canceled and rewritten for the vehicle’s new owner. Do note that some insurance companies will require a death certificate or executor of estate paperwork to make changes to the policy.