An insurance binder is a written, temporary proof of coverage, usually good for thirty or sixty days. The insurance agent usually provides a binder if they cannot print that policy in-house.
In Texas, binders are frequently used for commercial policies. The insured negotiates rates and coverage to within a few days of renewal, or opening a new business, and the insurance company cannot print the policies on time. The agent then provides a binder outlining coverage in force.
Binding coverage usually involves signing applications and depositing premium with the agent. Read the binder carefully and be sure all desired coverage appear on the binder. Each schedule does not require enumeration; for example, each vehicle does not need to be listed, but the business automobile limits of liability and physical damage coverage should be outlined.
If you are switching carriers, attach your old policy to the new binder to reference fleet, property, and liability schedules.
The same is true for homeowners and automobile policies. A binder is completely legitimate; however, it’s getting more rare that an agent doesn’t just produce the policy in-house. If you receive a binder, attach the replaced policy as a scheduling device.
Do keep track of time. The binder expires in a relatively short timeframe. Either ask for a new binder or the policies fifteen days before your binder expires.
