Binder
In insurance, a Binder is a temporary document issued by an insurance agent or broker to provide immediate proof of coverage before the formal insurance policy is finalized and delivered. It serves as a legal agreement between the insurer and the insured, outlining the terms, conditions, coverage limits, and effective dates that will apply to the upcoming insurance policy.
Binders are crucial for ensuring that the insured has immediate protection against potential risks during the interim period before the policy is officially issued. They are commonly used in situations where quick coverage is needed, such as when purchasing a new insurance policy, renewing coverage, or making changes to existing policies. Once the formal policy documents are prepared, the binder is replaced with the official insurance policy, which details the comprehensive terms and conditions of coverage.