There are around 268 million registered vehicles on America's roads, and the vast majority of motorists need auto insurance in order to drive. But, sometimes, things can get a little confusing, especially when you share a car with someone else. In this circumstance, who's the policyholder? And does it really matter? It's time to clear up the confusion once and for all. Here's everything you wanted to know about auto insurance policyholders — but were afraid to ask.

What's an Insurance Policy?

First thing's first, what's an auto insurance policy? In short, it's a document that details all the terms and conditions of your auto insurance. It's a contract between the insurer and the insured — the person (or people) who took out the insurance policy.

Make sense? Good.

Now you know what an insurance policy is, what about a policyholder? This is the insured person (or people) on the policy. Any insurance policy will contain the name, date of birth, and policyholder number of the insured person.

Is the Policyholder In Charge of the Policy, Then?

This is where things can get a little complicated. Most insurance companies list the name of the policyholder on the insurance policy, and that's that. The policyholder is the person responsible for paying the premiums, making changes to the insurance policy, and filing claims.

In most cases, the policyholder is the person who:

  • Owns the insured vehicle.
  • Receives the insurance policy documents.
  • Deals directly with the insurance company.

But this isn't always the case. Sometimes, an insurance policy can have more than one policyholder. This might happen if two (or more) people share a car and want to both make insurance payments. In almost all cases, though, the maximum number of policyholders is two.

"If there are multiple named insureds, it’s usually those who are married to one another, or individuals who live together and are co-titled on all vehicles listed on the policy. If more than two owners of a vehicle exist, the third would be listed as an additional insured," says The Balance.

Still confused? Here's a definition from the Insurance Information Institute:

"Auto insurance is a contract between the policyholder and the insurance company. The policyholder agrees to pay the premium and the insurance company agrees to pay losses as defined in the policy."

What's the Difference Between a Driver and a Policyholder?

If more than one person drives a car, the policyholder is usually the person who owns the vehicle and deals with the insurance company. The other person (or people) is called the driver (drivers).

What does this all mean when it comes to insurance? If the policyholder has a car accident, he or she will file a claim with the insurance company and handle all the paperwork. If a driver has a car accident, the policyholder will also file a claim and deal with paperwork. As you can see, the policyholder has far more responsibility.

Can a Driver Take Out Auto Insurance?

Despite the above, there are instances when a driver can take out an insurance policy, even if he or she doesn't own the vehicle.

There are some insurance companies that provide this service (it's called non-owner insurance), although you will need to do your research. Using an insurance comparison website will help you find the best deals on the market. You can compare various non-owner car insurance policies in one place and check out the best premiums and coverage with a click of a button.

Why Would a Driver Want to Take Out Non-Owner Insurance?

There are several instances when drivers might want to take out insurance for someone else's car. Here are a few examples:

  • A driver has a DUI conviction or other driving-related violation.
  • A driver uses car-sharing services.
  • A driver rents cars on a regular basis.

Non-owner car insurance is similar to regular car insurance. It provides drivers with liability coverage when they use someone else's vehicle.

What Happens When a Policyholder Adds a Driver to a Policy?

In most cases, a policyholder will add a driver to his or her policy, rather than the driver applying for insurance for someone else's car.

Most insurance companies will add drivers to an insurance policy for a fee. The driver will then be responsible for paying any additional premiums.

What Legal Obligations Does a Policyholder Have?

If you are the policyholder of an auto insurance policy, you will have several legal obligations. If you fail to meet these obligations, for whatever reason, your insurer could terminate your insurance policy.

Typically, you will be responsible for the following:

  • Reporting any damage to your vehicle to your insurance company.
  • Reporting any car accidents you have to your insurance company.
  • Making sure your vehicle is in a good road-worthy condition.
  • Paying your premiums on time.
  • Renewing your insurance policy on time.
  • Canceling your insurance policy on time.
  • Telling your insurer about a change in your circumstances.

Sometimes, it can be difficult to know who the policyholder is on an auto insurance agreement. The policyholder is the person (or people) who owns the vehicle and is responsible for any insurance-related obligations.