What’s the Difference between Certificate Holder and Policy Holder

| January 10, 2013

With all of the papers and documents issued in the insurance industry, it is easy for the average person to get certain terms confused. Two such terms frequently confused are certificate holder and policyholder. After all, certificates list insurance coverages along with limits and so do policies; how much of a difference could there be? Actually there is a big difference.

Insurance Policy

An insurance policy is a contract between the insurance company and the person (or business) purchasing the insurance. Whether the insurance is purchased to cover a new car, a home or a person’s life, the contract is between two parties.

Insurance Policy Holder

The person (or business) purchasing the insurance is the policyholder. Therefore, if Mary buys a new home and purchases insurance to protect her interests, she is the policyholder. The policyholder not only purchases the policy, but also in most cases is the person responsible for paying the premiums.

Certificate of Insurance

A certificate of insurance is different from an insurance policy in that it is not a contract between the insurance company and the policyholder. A certificate of insurance is also known as evidence of insurance. Frequently a certificate of insurance is required by contract. Let’s say Mary needs a contractor to build a new deck on her new house. Before agreeing to hire the contractor, Mary wants proof the contractor has adequate insurance. The contractor provides Mary with a certificate of insurance showing adequate coverage to handle the job.Certificate of Insurance

Certificate Holder

The certificate holder is the person requesting the certificate. In our example, Mary is listed as the certificate holder because she asked for proof of insurance. The contractor is the policyholder because he purchased the coverage (and is responsible for paying the premiums) while Mary enjoys certificate holder status. Confident that the contractor has adequate insurance, Mary hires him to build the deck.

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Category: Certificates, Insurance

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Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits and Stuff.

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