Primary Policyholder

When you purchase an insurance policy, there are two types of people (or entities) that are covered by the policy. The main person or entity covered by the policy is the primary policyholder. Any other person or entity also covered by the policy under certain conditions is typically designated as a secondary policyholder.

Someone who has an individual car insurance policy might want to designate friends or family members who might occasionally drive their car as secondary policyholders. This is usually a simple operation. To add a secondary policy holder to an insurance policy, the primary policy holder can contact the insurance agent that administers the policy. Adding a secondary policy holder then becomes a matter of very simple paperwork. It is not uncommon for the addition of a secondary policyholder to cause a small increase in the price of the insurance premiums paid by the primary policy holder. However, this small rate increase is much lower than adding an entirely new policy.

The primary policy holder is ultimately responsible for paying all premiums and deductibles. It is important for the primary policyholder to remember that they are typically going to be financially responsible for covering anything not covered by the insurance policy in the event of making a claim against the policy. Having a secondary policyholder on any policy does not transfer responsibility; it simply makes sure that property is covered while the secondary policy holder is using it. If you are a primary policy holder and thinking about adding someone as a secondary policy holder, bear in mind that you are essentially vouching for them to your insurance company. That is why it is advisable to only add members of your household or employees who use company vehicles as secondary policy holders. Adding secondary policyholders that are outside your household or who are not employees of a business you run is inadvisable except under a few very unique circumstances. Doing so could expose you to great financial risks.

It is important for the primary policyholder to look at all insurance coverage options when considering whether or not to add a secondary policy holder to his or her coverage. Make sure you discuss with your insurance agent all possible scenarios before adding someone to your policy. It is important for primary policy holders to get as much information as possible before making the decision to add additional

Think about coverage for more policy holders on an existing insurance policy. Failure to consider all options could lead to decision making that is not in the policy holders best interests. There is no insurance for poor insurance coverage decisions.

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