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Insurance Binder – What is Insurance Binder ?

Insurance Binder – What is Insurance Binder – When do you Need Insurance Binder

I won’t start with what an insurance binder is. In other words, I will go with a clear explanation of what an Insurance binder is. With little ado, Insurance is a contract between two parties, the insured and the insurance company.Insurance Binder

For a contract to exist there needs to be a consideration from both parties.  Consideration from the insurance company comes in the form of the policy issued, consideration from the insured comes in the form of a deposit check – often referred to as a “Binder” as the check serves to bind the insurance contract between both parties.

So a binder is the initial money you provide the insurance company (1st-month premium, etc) to bind the contract.

That said, by definition, an Insurance binder is a written legal agreement that serves temporarily as insurance coverage for people who are either in need of a home or car before the insurance of a formal insurance policy.

This bears all the protections and coverage limits, deductible fees, terms, and conditions. And this usually lasts for about 30-90 days and won’t cover you once it expires.

What Is An Insurance Binder?

This is a contract that is only but temporary between you and the insurance company while you wait for the formal issuance which its outcome in some cases maybe rejection. This is just a few pages of paperwork that contains terms and conditions of your temporary insurance contract and on its expiration usually after 30-90 days, you will no longer be under this insurance coverage.

The Association For Cooperative Operations Research and Development (ACORD) a non-profit organization issues the forms or templates of many insurance binders.

Sometimes an Insurance binder may be referred to as; An insurance policy binder, Title binder, Interim binder, Insurance card, or Certificate of insurance.

So, you can also refer ACORD to as an ACORD binder or ACORD insurance binder.

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There are also few phrases used by insurance companies such as; bind insurance or bind coverage, which means the insurer is bound by, committed to, an agreement to assume coverage before issuance of an insurance policy. So you can get yourself accustomed to these.

Types Of Insurance Binders

These insurance binders may come in different forms for several insurances;

  1. Auto insurance
  2. Homeowner’s insurance
  3. Commercial property insurance

What’s in an Insurance binder?

I did well to make it clear what a binder is and why you need one in the above paragraph. That said, I will further say that there is some basic information that an Insurance binder should have. And that includes:

  1. Insurance binder holder and/or name insured
  2. Insurance company and agent contact information
  3. Binder number
  4. The asset of risk insured
  5. Coverages and Coverage limits
  6. Deductibles
  7. Insurance endorsements
  8. Premium, or any required payments and fees
  9. Binder term, including effective and expiration dates
  10. Lender if your asset is secured by financing
  11. Disclosures, terms, and conditions.

For example, you own a car, and they insure it. You trade the car in for a new car. You would then call your insurance agent and tell them you have traded in the old car for the new car. The agent would then take information about your new car bind insurance under your current policy on it. You will then be billed for the difference in premium between the new car and the old car.

When Do You Need An Insurance Binder?

After an accident, you will need the help of an insurance binder to file a claim before you receive your formal insurance policy.

Purchasing a New Insurance Policy

It is always important that you request an Insurance binder before obtaining the actual policy, as this can help you verify the accuracy of the coverages you applied for and confirm that they insure you.

Financing Your Property

While taking a loan to finance your car, home, or commercial property, you will need evidence of an insurance policy from an insurance company. You can present an insurance binder if your insurance policy isn’t ready yet.

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Be it as it may, you will need to provide it only when it’s formal, not when the need is not in view. In the end, both parties that agreed may seem to be enemies. But the best of the drill lies in the practical steps.

Purchasing a New Home or Car

To close a mortgage for your new home or get approval for an Auto loan for a new car, your temporary insurance binder can serve as evidence of Insurance.

It is also interesting that sometimes where you did need proof for an insurance binder, the issuers can send letters through e-mail or fax immediately after request.

What to Do After Your Insurance Binder Expires

Once your insurance binder expires, you will lose coverage and stand at risk for any accident incurred during this period, so you should immediately follow up with your carrier to determine the status of your insurance policy, if successful, should demand a copy immediately.

Insurance Binder and Policy – What’s the difference

We all know that a policy is coverage for a specific time period. Whereas a binder is TEMPORARY proof of coverage for a much shorter time frame until the insurance company has issued the actual policy. If that’s all, then it would have been easy. But there is more to that, which I do think you will come across them in this post.

That said, most binders are good for 30 days or less, and is just your legal proof that you actually bought the coverage. If they have not issued the policy in that 1st 30 days, they might require a 2nd binder for another 30 days. Although a binder can be issued for longer than 30 days, that is rare, if they know a company to take 6 weeks, they might issue the original binder for 6 weeks.

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The sole purpose of the binder is so that the purchaser of the insurance can show what he bought, AND is proof of coverage should a covered event occur, such as a car accident or a fire.

In the End

To cap it all, if you read to this point, I trust the post was helpful. But, if proved otherwise. As a result, if there is a fact or info you would want me to correct or add to the post. Maybe a question best of all, a thank you comment. It’s no big deal. Use the comment box below. I delight to hearing from you.

One more thing, if you know a friend this post will be of help. Be it on Facebook, Twitter, WhatsApp, Pinterest, TikTok, etc. Don’t forget to use the share button below. Remember, when you help a friend, a whole community benefits. Thanks.


  • Christian Ehiedu

    I write for Educational, Financial, technology, and social media content producers. I am deep into doing credible research that will benefit you the reader. You can contact me on Tumblr, Chris Adam Facebook, Shopfortool Pinterest Account. I am a Technician and a woodworker. I have lots of years of experience in Technical work. I did some per time work at an electrical store. Having gathered lots of experience in the use of various tools link Mechanic Tools, Woodworking Tools, Power Tools, and Plumbing tools, I decided to put up this blog to help advise intending buyers or new biz on the right tools to buy on the market. My social Handle:

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