diff --git a/lib/client/api.go b/lib/client/api.go
index 5efb601be81e1..e43b6ab28f3c9 100644
--- a/lib/client/api.go
+++ b/lib/client/api.go
@@ -674,6 +674,20 @@ func WithBeforeLoginHook(fn func() error) RetryWithReloginOption {
 
 // IsErrorResolvableWithRelogin returns true if relogin is attempted on `err`.
 func IsErrorResolvableWithRelogin(err error) bool {
+	// Private key policy errors indicate that the user must login with an
+	// unexpected private key policy requirement satisfied. This can occur
+	// in the following cases:
+	// - User is logging in for the first time, and their strictest private
+	//   key policy requirement is specified in a role.
+	// - User is assuming a role with a stricter private key policy requirement
+	//   than the user's given roles.
+	// - The private key policy in the user's roles or the cluster auth
+	//   preference have been upgraded since the user last logged in, making
+	//   their current login session invalid.
+	if keys.IsPrivateKeyPolicyError(err) {
+		return true
+	}
+
 	// Ignore any failures resulting from RPCs.
 	// These were all materialized as status.Error here before
 	// https://github.com/gravitational/teleport/pull/30578.
@@ -682,11 +696,10 @@ func IsErrorResolvableWithRelogin(err error) bool {
 		return false
 	}
 
-	return keys.IsPrivateKeyPolicyError(err) ||
-		// TODO(codingllama): Retrying BadParameter is a terrible idea.
-		//  We should fix this and remove the RemoteError condition above as well.
-		//  Any retriable error should be explicitly marked as such.
-		trace.IsBadParameter(err) ||
+	// TODO(codingllama): Retrying BadParameter is a terrible idea.
+	//  We should fix this and remove the RemoteError condition above as well.
+	//  Any retriable error should be explicitly marked as such.
+	return trace.IsBadParameter(err) ||
 		trace.IsTrustError(err) ||
 		utils.IsCertExpiredError(err) ||
 		// Assume that failed handshake is a result of expired credentials.
diff --git a/lib/client/api_test.go b/lib/client/api_test.go
index 47c6669ff1a38..3204ae64768b3 100644
--- a/lib/client/api_test.go
+++ b/lib/client/api_test.go
@@ -37,6 +37,8 @@ import (
 
 	"github.com/gravitational/teleport/api/client/webclient"
 	"github.com/gravitational/teleport/api/types"
+	"github.com/gravitational/teleport/api/utils/grpc/interceptors"
+	"github.com/gravitational/teleport/api/utils/keys"
 	"github.com/gravitational/teleport/lib/defaults"
 	"github.com/gravitational/teleport/lib/events"
 	"github.com/gravitational/teleport/lib/observability/tracing"
@@ -1215,3 +1217,32 @@ func TestConnectToProxyCancelledContext(t *testing.T) {
 	require.Nil(t, proxy)
 	require.Error(t, err)
 }
+
+func TestIsErrorResolvableWithRelogin(t *testing.T) {
+	for _, tt := range []struct {
+		name             string
+		err              error
+		expectResolvable bool
+	}{
+		{
+			name:             "private key policy error should be resolvable",
+			err:              keys.NewPrivateKeyPolicyError(keys.PrivateKeyPolicyHardwareKey),
+			expectResolvable: true,
+		}, {
+			name: "wrapped private key policy error should be resolvable",
+			err: &interceptors.RemoteError{
+				Err: keys.NewPrivateKeyPolicyError(keys.PrivateKeyPolicyHardwareKey),
+			},
+			expectResolvable: true,
+		},
+	} {
+		t.Run(tt.name, func(t *testing.T) {
+			resolvable := IsErrorResolvableWithRelogin(tt.err)
+			if tt.expectResolvable {
+				require.True(t, resolvable, "Expected error to be resolvable with relogin")
+			} else {
+				require.False(t, resolvable, "Expected error to be unresolvable with relogin")
+			}
+		})
+	}
+}