What is an Insurance Binder?


An insurance binder shows the agreement made between you and the insurer. It confirms in writing that a policy will be issued.

Prior to the issuing of a formal insurance policy, an insurance binder serves as temporary proof of insurance coverage.

Insurance binders are typically required when acquiring a house with a mortgage or a new automobile with an auto loan to provide proof of insurance coverage.

As well as any coverage limitations, deductibles, fees, terms, and conditions, the binder details all of the safeguards that are now covered while you wait for a new policy to take effect.

Insurance binders often last between 30 to 90 days, so it's always a good idea to check in with your provider to be sure you have a proper policy in place.

Insurance Binder

What is an insurance binder?

By Definition: An insurance binder is a temporary document confirming an insurer’s commitment to honor a policy of insurance.

Let me give you a detailed explanation with examples here.

The buying of an insurance policy is not similar to the purchase of a piece of pizza; insurance policy wordings are not kept on a warm shelf.

After completing the procedure with an insurance agent or broker, there may be a little delay until you get the formal policy documentation.

Perhaps an assessor needs to evaluate your policy, or perhaps the insurance provider is just a bit slow. In the meantime, the bank that granted you a mortgage is waiting for evidence that your new home is insured.

What are you supposed to do?

This is why insurance binders exist. A binder is temporary insurance paperwork given by your insurance provider that essentially states:

“Yes! This property is insured by us."

Binders are temporary confirmations of insurance that allow you to complete tasks while you await the arrival of your permanent policy.

Types of insurance binders

Insurance binders can come in several forms for different types of insurance, including:

1. Auto insurance
2. Homeowners insurance
3. Commercial property insurance

What does an insurance binder include?

Let's take an example of a home insurance binder, it breaks down the complete details of your policy. The binder will include important details about your policy, such as your coverage amount, what's being insured, any deductibles, and your policy's type and provider.

The insurance binder breaks down;

  • whats being insured
  • Liability insurance amount
  • Deductibles amount
  • Name insureds
  • Name of insurance company and type of insurance
  • Policy number
  • Term of insurance
  • Name of the insurance agent

When will I require the use of a binder?

There are a number of different circumstances in which you will want a binder, including the following:

Your mortgage lender needs evidence that the home they have just invested in is covered by an insurance policy before they will approve your loan.

You recently purchased an insurance policy, but you have an emergency medical need even though you have not yet gotten your policy documentation (a lot less common, but important nonetheless).

How to get an insurance binder

If you end up needing an insurance binder, you’ll most likely get one from your insurance provider automatically once you buy a policy. If you aren’t automatically issued one, all you have to do is call your insurance company and request one is mailed or emailed to you.


What happens if my insurance binder expires?

Your insurance binder can no longer qualify as evidence of insurance if it has expired. If this occurs, it is imperative that you contact your insurance company immediately to confirm that your coverage is current.

It is a great practice to monitor your binder's expiration date. If that date is quickly coming and you have not yet received your formal policy, contact your insurance provider in advance.

Once a binder has expired, it is no longer acceptable as evidence of insurance.

Frequently Asked Questions (FAQs)

How long is a binder good for?

The binder should be valid for a set term that's written on the document. It's only valid until the actual policy documents are printed and issued. The binder is null and void and is replaced by the actual contract when the official documents are issued.

What happens if a binder expires?

If you haven't received your official documents, and your insurance binder is about to expire, you'll want to follow up with an insurance agent. You may not be insured after that date if there is a complication that you fail to correct.

What is a binder check for health insurance?

Health insurance binders are different from the auto insurance and home insurance binders discussed here. Some health care policies may require you to pay the first month's premium before your coverage begins. In that case, your first month's premium is your "binder payment." This payment can be made through check, electronic funds transfer, or another similar payment method.

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KIDIGITALI - Information Guides: What is an Insurance Binder?
What is an Insurance Binder?
An insurance binder shows the agreement made between you and the insurer. It confirms in writing that a policy will be issued.
KIDIGITALI - Information Guides
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