When you purchase an insurance policy, there's often a gap between the moment you apply and when the policy is officially issued. A moment like this is where binder insurance is applied. But what is binder insurance exactly?
What is Binder Insurance?
Binder insurance is a temporary form of coverage that provides immediate protection until your actual insurance policy is issued. It is a short-term contract between you and the insurance company, this ensures that you are covered while the details of your policy are being processed. Binder insurance is not specific to one type but instead can be used for, auto, home, and commercial insurance.
When you apply for an insurance policy, the company may take awhile to approve the policy. Your insurer may issue a binder, typically valid for 30 to 90 days. This document outlines the basic terms and coverage limits of your eventual policy. While it's a temporary measure, it holds the same weight as a regular insurance policy in terms of coverage.
Why Do You Need Binder Insurance?
Binder insurance gives you immediate coverage. When you drive a new car off the lot or purchase a new house, you need coverage right away. But some insurance companies like to do their due diligence before offering you a policy. This is when they offer binder insurance protecting you and them.
Binder Insurance can be used as a proof of insurance. In many phases of life you are gonna have to provide proof of insurance. Whether you're closing on a home or registering a vehicle, you need to provide proof of insurance. A binder can serve as this proof. This allows you to finish your transactions without issue.
A major reason for Binder Insurance is Peace of Mind. Life can be crazy, you never know when your going to need insurance. This protects you in a time where your official policy has not been approved yet, no matter the situation you will not be left vulnerable.
Independent insurance brokerage located in Tempe, AZ. We offer auto insurance, homeowners insurance, life insurance, renters insurance, commercial insurance…
Disclaimer: Coverage will vary on state, insurance company, and type of policy.
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