Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Benjamin Carr was a licensed insurance agent in Georgia and has experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. Benji is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: Mar 10, 2022

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To Sum It Up

  • Insurance binders are temporary contracts that provide proof of insurance for your car, home, or commercial property
  • They are necessary when making a purchase or applying for a loan that requires proof of insurance before your new insurance plan has taken effect
  • Insurance binders are not representative of your new insurance plan, only temporary documents that provide coverage and show the purchase of insurance that typically last between 30 to 90 days

If you are searching for a car insurance plan or the right car insurance company, you might run into some questions about certain terms, such as what an insurance binder is. You might be in a position where an insurance binder could benefit you, so we will learn about what they are and when you might need to use one.

In addition to learning about whether or not an insurance binder would be useful to you, you can also check what car insurance premiums cost in your area by entering your ZIP code here on our free online quoting tool.

What is an insurance binder?

An insurance binder is a temporary insurance contract between you and the insurance company that serves as proof of insurance for your home, property, or car before your new plan becomes effective. The binder is the issuance of temporary insurance for the individual while they wait for the plan’s start date to take effect.

The binder also lists the basic aspects of your plan such as coverages, deductibles, and the individuals attached to the plan. An insurance binder for a car insurance plan will also include key information about the make, model and VIN of the vehicle(s) insured.

If you have recently acquired a new insurance plan, you also might have heard insurance binders being referred to with different names, as there are a few. Binders are insured by the Association for Cooperative Operations Research and Development (ACORD), which is a nonprofit that measures insurance standards and gives insurance companies relevant consumer data. This is the reason why insurance binders are often referred to as ACORD binders or ACORD insurance binders. Other names for a binder include,

  • Title binder
  • Interim binder
  • Certificate of insurance
  • Insurance card
  • Insurance policy binder
  • Temporary insurance certificate

If any of these names for an insurance binder are mentioned by your agent, they are likely referring to the insurance binder we are discussing in this article.

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How do you get an insurance binder?

Getting an insurance binder today is pretty simple compared to the past. With the purchase of any new insurance policy, you are guaranteed access to an insurance binder. All you have to do is ask your insurance agent for one, and they will either print one to mail to your address or more commonly these days they will digitally send you the file that you can forward to the vendor you are purchasing from.

It is a very quick process and helps when you are making a purchase that requires proof of insurance and there’s not much time to wait. It sure beats having to wait for the document to come in the mail.

When should you use an insurance binder?

If you are looking to secure a mortgage loan or purchase a new vehicle, the banks and/or dealerships usually require proof of insurance before approving any purchase. This is where the insurance binder comes into play. In the past, individuals would have to physically meet with an insurance agent for a new plan and the underwriting process for a new plan took weeks to take effect.

Insurance companies would assign insurance binders to individuals in the meantime to allow them to have temporary insurance for purchases.

In today’s world, with the ability to purchase insurance plans via the internet and have them take effect within a day or two, binders are certainly less common. Though, in some cases, the vendor requires proof of insurance before your insurance company has had the time to formalize the official documents that prove your coverage. The binder serves the purpose of acting as a placeholder insurance policy in the meantime.

Types of Insurance Binders

Almost every form of coverage type will have the option of acquiring an insurance binder, the most common forms of an insurance binder are:

  • Homeowners’ insurance binder. The most common example of an insurance binder is when an individual is applying for a mortgage loan for a new house. Binders in this form typically include the essentials such as liability, dwelling, and medical payments.
  • Car insurance binder. Binders are useful when purchasing a new vehicle or applying for an auto loan. Liability, comprehensive car insurance, and collision are usually included with binders of this sort.
  • Commercial property insurance binder. If you are investing in a commercial property for a small business, you might have to use an insurance binder. These usually include standard building insurance required for purchasing/renting a new property.

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What is included in an insurance binder?

When issued, insurance binders typically act as placeholder insurance plans anywhere between 30 and 90 days. During this time, the binder should define:

  • Insurance binder holder and/or the insured individual
  • Insurance company and agent contact information
  • Deductibles
  • Insurance endorsements
  • Coverages and coverage limit
  • The asset or risk insured
  • Binder number
  • Binder term, including effective and expiration dates
  • Appropriate lender if your asset is secured by financing
  • Disclosures, terms, and conditions

Verify with your agent that these items are defined whenever you are issued an insurance binder, otherwise, it might not be effective when securing a loan or purchasing a vehicle. If you are looking to find a reputable insurance company, checking out this list of some tips when looking for a new car insurance plan is worth a read.

What should you do after the insurance binder expires?

Before the expiration date stated on your insurance binder arrives, verify with your insurance company that the new insurance plan you’ve purchased has taken effect. If it has, the insurance binders coverage is invalid and can no longer be used. If for any reason the insurance plan you’ve purchased has not taken effect and the binder has expired, you will no longer be covered and you can be at risk for any accidents that may occur while uninsured.

Always follow up with your insurance agent to verify the transition into the new plan went successfully and that you won’t experience a lapse in coverage.

Insurance Binders in Summary

In the period between purchasing a new insurance plan and its effective start date, insurance binders provide temporary proof of coverage between 30 and 90 days. They define the policies of the new plan and verify the purchase of the said plan. They are necessary for purchasing a mortgage loan, a vehicle from a dealership, or purchasing a commercial property before your insurance coverage has begun.

Insurance binders are given to you upon request by your insurance company or agent you are working with and can either be mailed in print form or sent digitally for immediate use. In the 30-90 day grace period of coverage before your insurance begins, you have matching coverage relating to your insurance plan. Make sure to verify that your insurance has started before the binder expires, or else you may be at risk for any uninsured accidents or coverage.

If you are in the market for a new insurance plan, you can always use our free online quoting tool to compare prices in your area by entering your ZIP code here.