Essentially, an insurance binder acts as a placeholder for a formal insurance policy during the underwriting process, which can last days or weeks. This is especially true if they took out a loan to make the purchase.Īn insurance binder can help bridge the gap between applying for a new insurance policy and officially having one. When someone buys a new car or a home, they generally need to have an insurance policy secured the day they assume ownership. When you need to prove insurance coverage, but are still waiting for your policy to be issued, an insurance binder can help bridge that gap.
While not always required, there are times when you may need to have auto insurance, homeowners insurance or other types of insurance in order to secure a loan or remain compliant with local laws. This is where insurance can step in to save the day. Life tends to throw curveballs our way more often than we’d like.
You may need to provide a lender with an insurance binder in order to take possession of an asset used to secure the loan.An insurance binder acts as a placeholder for a formal insurance policy.
