What is an Insurance Binder?
An insurance binder can be useful for many people who have yet to finalize a formal insurance policy; it will simply cover you until a more permanent one is processed and becomes active. There are certain things which the binder must contain, including your name as well as the limit of coverage and the type of insurance it is. There needs to be something specific which is being insured, such as a house or a car as well as the company which is providing the insurance coverage. If you are getting an insurance binder for a car or home that you were able to purchase because of a loan, the lender information must be included as well. When you apply for insurance through a certain company, they may be able to give you a temporary binder which will give you the full effect of your coverage until the final policy goes through. There are a lot of different companies that are doing this and it might be a good idea to look into getting your policy from one that does. Because a vast majority of insurance agents cannot authorize a binder themselves, it typically starts being active the following day.
Auto dealerships almost always require that you show proof of insurance in order to purchase a vehicle from them, as well as lenders before you can get the money you need to buy a new automobile. If you do not want to have to wait over a week until your policy officially goes into effect, you will want to think about getting a binder. You will first need to make sure that the company you choose offers these, because not all of them do. By having an insurance binder you will be able to get the car or even home that you want without having to wait ten days or so until the policy becomes active. If you are in this type of situation the insurance company you choose may be able to give you a handwritten binder which will enable you to get the car you want and drive it off the lot that day. It is certainly very convenient for many people who simply do not want to wait any longer than they absolutely have to for their new car because of insurance formalities.
There is also homeowner’s binder insurance which can be equally as useful. This type of binder comes in handy when your home sustains damages due to a fire or some other natural disaster where you need to assure your mortgage holder/lender that you have insurance which can cover the damages. You will find that a majority of lenders require that the amount you are insured for is at least equal to the amount you have on your loan. There are definitely some precautions you should take when it comes to these loans, including insurance companies not paying out your claims even though you have a binder. Since there is this certain amount of risk involved, you will definitely want to think about whether or not you want to get one. The laws regarding these types of situations vary from state to state, so you will want to ask an insurance professional if a claim will be honored during this binder period.
All insurance agents have to be licensed by the state they are issuing insurance coverage in and there is a strict set of protocols which they must follow in order to abide by the law. You will want to keep in mind that the underwriting department which overseas your insurance request has the right to change the amount of coverage you have at any time before it is approved. There are different types of insurance binders and in order to get a balanced view on them you should look at everything that is available to you. In order to buy a car, home, boat, or RV you will need a binder in the event that your new insurance policy has not be confirmed yet.
Binders are issued for a lot of different types of insurance, including that which is meant for pets, healthcare, dental, property, renter’s, and much more. There are various types of binders for professional reasons, such as building contracts as well as workers comp and other things which may pertain to your particular situation. Before you make a decision as to whether or not you want to get a binder, you will need to think about whether or not you want to buy any of the things above in the near future and cannot wait for your actual policy to go through.