What is a policyholder for car insurance?

A policyholder for car insurance owns the policy and is legally responsible for payments. Listed drivers can legally drive the insured car, but only the policyholder for car insurance can file claims.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jan 31, 2021

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Here's what you need to know...

  • The “named insured” on an auto insurance policy has all of the legal rights and responsibilities under that specific policy
  • A “listed driver” is different from the named insured on an auto insurance policy
  • You can have joint owners on an auto policy if two people are both going to be responsible for the auto insurance policy

The policyholder for a car insurance policy is the owner of the car insurance policy. This comes with certain legal rights and responsibilities for the policyholder.

The policyholder is the person who is responsible for paying the premium for the insurance policy.

This is different from a listed driver on the policy, who is a person that has the right to drive the cars insured by the policy but would not be able to make any actual changes to the policy or file his own claim through the policy.

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Responsibilities of the Policyholder

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The name of the policyholder for a car insurance policy is listed on the declarations page of the policy.

Since the auto insurance policy is taken out in the policyholder’s name, it is that person who has the financial responsibility to make the required premium payments for the policy.

In exchange for the policyholder’s premium payments, the auto insurance company is responsible for paying certain losses under the policy, which depends on the types of coverages that the policyholder elects to carry.

The major categories of damages paid out by the car insurance companies include expenses for bodily injury, such as medical expenses, and property damages.

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The Difference Between the Policyholder and Listed Drivers on a Car Insurance Policy

You can be listed on a car insurance policy without having the same rights and obligations as the policyholder. This would make you a listed driver, and you would have the rights to drive any of the cars listed in the policy.

However, you would not be personally covered for any damages as a result of an incident involving you driving one of the covered cars.

Here are some of the circumstances where it makes sense to “list” a driver:

  • Frequent driving of the car
  • Good credit score to lower the premium
  • Teen driver who would have difficulty getting coverage

One of the major reasons that a person is listed as a driver on an insurance policy and is not the policyholder is that this person may be frequently driving cars insured by the policy.

Another reason to add someone as a listed driver is that they may have an exceptionally good credit score or driving record, which could lower your collective rate for car insurance.

Having a young driver in your family is another typical reason that you would add a driver to your policy.

A teenage driver has a much more difficult time finding affordable coverage on his or her own, so it is quite common to add that driver to a parent’s policy and simply pay an additional amount for coverage.

This means that if the teen driver is involved in a car wreck, there would be covered under your policy for any damages caused.

However, the teen driver would probably not be able to file his or her own claim for damage just be being a listed driver on someone else’s policy.

State Laws and Regulations on Listing Additional Drivers on Your Car Insurance Policy

In some states, only people who are legally considered to be family members or reside in the same house as you are allowed to be added to your policy. In others, you can add any driver that you wish to your insurance policy.

Bear in mind that if you choose to have another driver added as a listed driver under your auto insurance policy, this could result in you paying a slightly higher price for your premium.

When you are looking into adding another driver to your policy, ask your auto insurance agent about any compliance issues under state law.

You do not want to find out down the line that your insurance arrangements did not provide adequate coverage.

If your insurance agent quotes you a high rate to add another driver to your car insurance policy, this is a good reason to explore other options for other quotes for coverage.

Be sure to explain the arrangement of having a listed driver when you are looking for other car insurance coverage options.

Wrap Up on Policyholders for Car Insurance

A policyholder refers to the person who took out the auto insurance policy and is responsible for paying the amount of the premium for the policy.

The policyholder can file a claim under the policy and can even add another driver to the policy.

A listed driver, on the other hand, only has the policyholder’s permission to drive a car that is covered by the insurance policy.

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