Everything you need to know about the policyholder and his/her obligations

When you take out insurance, it is essential to understand the role of the policyholder , their relationship with the insured, and the obligations they assume within the contract.

Often, the policyholder and the insured are the same person, but in other cases, they may be different. This can affect the management of the insurance, the payment of premiums and liability in the event of an accident.

In this article, we will explain in detail what the policyholder is, what their functions are, and what happens if they fail to meet their obligations.

Who is the policyholder?

The policyholder is the person (natural or legal) who signs the contract with the insurer. They are the one who negotiates and signs the policy and assumes responsibility for paying the premiums , ensuring that the insurance remains in force.

Example: A company takes out professional liability insurance for its employees. In this case, the company is the policyholder, but the employees are the insured parties.

The policyholder has several key responsibilities, such as:

• Choose the insurance coverage and conditions.
• Pay the premiums to the insurer.
• Comply with contractual obligations.
• Report changes in the insured risk.

Differences between policyholder, insured and beneficiary

Three key figures may be involved in an insurance contract:

Example: In a life insurance policy , the policyholder can be a worker, the insured the same worker, and the beneficiary his family.

In some cases, a single person can assume two or all three roles at the same time.

Obligations of the policyholder

The policyholder is responsible for fulfilling several legal and contractual obligations , including:

1. Payment of the insurance premium

The policyholder is the one who pays the premium to keep the insurance policy in force. For example: A company takes out professional liability insurance. If it stops paying the premium, the policy may be suspended or cancelled.

2. Declaration of the insured risk

The policyholder must provide truthful and complete information about the insured risk. For example, an architect taking out liability insurance must disclose whether they work on high-risk projects, such as skyscrapers or complex structures.

3. Communication of changes in risk

If there are any changes that affect the insured risk, the policyholder must inform the insurer. For example, if an insured doctor changes their specialty to one with higher risk, they may refuse to cover a claim.

4. Compliance with contractual obligations

The policyholder must ensure that the contract is fulfilled as stipulated in the policy. For example, in a business insurance policy, the policyholder must follow all the preventative measures required by the insurer to avoid accidents.

What happens if the policyholder fails to meet his or her obligations?

If the policyholder fails to fulfill their responsibilities, several negative consequences may arise :

• Suspension or cancellation of insurance: If the premium is not paid, the insurer may suspend coverage or cancel the policy.
• Loss of compensation: If the policyholder does not correctly declare the risk, the insurer may refuse to pay compensation.
• The insured assumes the obligations: If the insured is different from the policyholder, he may be obliged to assume the contractual obligations.

Example: A company stops paying its employees' liability insurance. If the policy allows it, the employees (insured parties) could assume the payment to maintain coverage.

Rights of the policyholder

The policyholder also has certain rights , including:

• Choosing the insurer and negotiating the conditions.
• Modify or cancel the policy if the contract so establishes.
• Receive clear and detailed information about the policy.
• Request changes to coverage based on your needs.

Tip: If you have any doubts about your policy, it is advisable to consult with an insurance expert to make the best decision.

Common cases where the policyholder and the insured are different

In many insurance contracts, the policyholder and the insured are the same person, but there are situations where they are different.

• Example 1: Company and employees → A company (policyholder) takes out health insurance for its employees (insured).
• Example 2: Padres e hijos → A father (policyholder) takes out life insurance to protect his son (insured).
• Example 3: Self-employed and business → A self-employed person (policyholder) takes out civil liability insurance to cover his professional activity (insured).

Tips for choosing the best insurance as a policyholder

To ensure you choose the right policy, follow these steps:

• Analyze the needs of the insured and the coverage you really need.
• Compare different insurers to find the best conditions.
• Review the policy exclusions to avoid surprises in the event of an accident.
• Make sure you can meet your obligations of the contract.
• Consult with insurance experts, such as Canarisk, to obtain specialized advice.

The importance of the policyholder in the contract

The policyholder plays a key role in the formalization and maintenance of the insurance contract. He or she is responsible for paying the premium and ensuring that the insurance remains in force.

If the policyholder fails to meet their obligations, the insured may be affected, so it is essential to know the rights and duties of each party in the contract.

At Canarisk , we help you understand and purchase the insurance that best suits your needs.

Do you need insurance advice? Contact Canarisk and find the best option to protect your business and your assets. We will advise you without obligation!