Who Should be the Named Insured or Policyholder?

October 31, 2023

Who Should be the Named Insured or Policyholder - a Halloween Mystery Story!

As the Spooky Season comes to a close, Insurancehelper.com would like to take the fright out of knowing who to name on the policy!

Generally, we can insure one legal entity per policy - there are some notable exceptions, but the general rule is similar to common insurable interests (like a bride and the mother of the bride).

A legal entity is:

  • one single person (must be an adult)
  • married couple, or legally recognized domestic partnership
  • a corporate entity; C-Corp, S-Corp, LLC, LTD., you'll notice that those suffixes follow the business name to designate the actual business entity...if you have a company/business/corporation, drill down one level further to get the actual company name, including the suffix.
  • a business partnership that has a tax filing/TAX ID #, some are very structured, and followed by LP or LLP
  • a non-profit!!!  YES - an actual nonprofit is a "501c" designated CORPORATION!!!!  they are businesses!!!  while their mission is certainly altruistic, they should be treated just like an LLC - see 'how to' below.

A Legal Entity is not:

  • a person under 18 (who hasn't been legally emancipated)
  • a group of people, who don't have a legal entity set up, like a reunion committee, neighborhood group, etc. If you are frightened when you're asked what the TAX ID # is - you probably don't have one.
  • a DBA!  A trade name is not a legal entity - you cannot sue, find judgment against, or receive payment from a fictitious business name!  The legal entity behind that name is the actual entity recognized by the State, IRS, and legally.  In every case, there is a legal entity with an SSN or TAX ID # behind that name.  Every Time.  

How to Build the Named Insured:

  • Who are we dealing with? Is this a personal rental for a wedding?   The NI is the (drumroll) ... contract signer!!  That's who is accepting the exposure with the signing of the contract, they should get the benefit of coverage!!  Then we add, anyone/everyone who has (who learned this from above?) ... SIMILAR INSURABLE INTEREST!!!  That's the fiancée! Parents of the couple!! What it isn't...The Other set of parents!!!  The Grooms and Brides parents have a SEPARATE insurable interest - and very realistically could sue each other.
  • Who are we dealing with - if a Company/Commercial - Drill down to find the entity...if Corporate, put the actual company name in the business name field...then we can add their DBA.  ALWAYS use c/o before their personal name...WHY? - Because we aren't insuring the individual - ONLY the business!!!
  • Who are we dealing with - unincorporated committee/group - the sticky situation...an individual is signing the rental contract then they are taking on that exposure personally.  They go in the First/Last name field.  The Group name goes into the Business Name field...KEY POINT!  don't use a 'c/o' as we are insuring the person...the Group gets the benefit of coverage for others; 'ONLY WHEN PARTICIPATING AS A MEMBER OF THE GROUP'  like setup, cleanup, etc...otherwise they are patrons of the event to preserve the BI exposure.

What We Don't Want:

  • Two separate insureds on one policy that can sue each other!  Like a member/shareholder of a corporation and the corporation themselves
  • Two separate individuals that are not operating as a partnership
  • A renter and a SUBCONTRACTOR!!! - The Bride AND the Bartender - Booooo!!!  (like a ghost!)
  • An individual and their Non-profit!!!  One or the other, and designate the contact person with a 'c/o'

Who to name in the application to become the policyholder can be scary, but rest assured ladies and ghouls, the customer service specialists at Insurancehelper.com are here to take the fear out of this nightmare!

Have a safe and happy holiday!