If you have ever tried to get insurance, you have surely heard the term "insurance binder." When getting insurance, it is important to know what every term means, including its specifications and special conditions. Legal terms can be a little confusing sometimes, since there are technical terms involved in the legalese. Knowing what an insurance binder is and how it works will help you acquire effective insurance coverage.
Definition
An insurance binder is a sort of insurance probation. This means that while your insurance broker is doing paperwork, or submitting your insurance request to his company, you get all the benefits of the insurance you're trying to get. In other words, you'll have all the benefits and advantages of your insurance policy coverage without being officially insured. Insurance companies offer this type of probation time to attract more clients and commit them from the start in their insurance plans. If anything happens to you while being under the insurance binder, the insurance company will take charge of everything.
Duration
The insurance binder usually lasts for only a few days, though this will depend on the deal you make with your insurance broker. He will probably give you a determined number of days according to the time he'll need to submit your insurance policy request to his insurance company. You'll have an insurance binder until the day you know if your insurance policy has been accepted or denied. Insurance companies try to attend to requests as soon as possible, since they don't want to give coverage without being paid.
Agreement
The insurance binder is often based on an oral or written agreement with your insurance broker. The deal is usually sealed when you agree to acquire a determined insurance policy, so you can get automatic coverage. You should at least sign an informal sort of contract between you and your insurance broker to avoid any kind of problems or misunderstandings.
Coverage
The insurance binder can cover anything you want to insure. You can get medical insurance, for example, as well as an insurance binder for your car, house or any good you consider worth insuring.
