If you have ever wondered who the policyholder is for insurance coverage, the answer is quite straightforward. The person who has purchased the policy and has the authority to exercise the rights stated in the contract is the policyholder. The policyholder is in most cases the insured or could be one of the policies beneficiaries.
Simply put, the person’s name that appears on the documents of the insurance company’s records is the policyholder.
It is also important to understand how insurance works when you are shopping for a policy. An insurance policy is composed of three components, the deductible, the policy limit, and the premium. Having a solid understanding of each of these components will ensure that you can select the best insurance policy for your lifestyle and needs. Keep reading below to find out what you need to know.
The amount that the policyholder must pay out of pocket before the insurer will pay the claim is called the deductible. Depending on the policy, there may be a deductible for each claim or just one per policy term. Deductibles are used as deterrents so that policyholders do not submit large amounts of insignificant or small claims, helping to keep premiums lower for all policyholders.
The maximum amount that an insurer will pay under a policy for a covered loss is the policy limit. Policy limit maximums can vary according to the type of policy you have and the insurance provider. They may be set per loss or per injury, or annually or over the life of the policy, which is referred to as the lifetime maximum. In most cases, higher policy limits come with higher premiums.
The policy premium is the cost, which can typically be broken into monthly or quarterly payments. Insurance companies use a risk profile to help them calculate and determine what your premium will be. For example, someone that has had a perfect driving record for twenty years, does not have long commutes to work and drives a common SUV will almost always pay a lower auto insurance premium than someone with a Corvette, reckless driving record and previous drunk driving infraction.
You may be surprised to find that similar policies can have very different premiums or that you may qualify for a discount. Using a trusted insurance broker is the best way to find the lowest rate for the policy that will suit your needs the most. At Bow Valley, we compare rates, coverage options and uncover what discounts you may qualify for. We do the shopping for you.
For a free, no obligation quote on home or auto insurance, contact an experienced professional at Bow Valley Insurance today.