What Is an Insurance Binder?

Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Buying a home or a new car is one of the more exciting things you can do. There’s nothing that quite competes with that feeling as you prepare to make such a big purchase. Unfortunately, the process can be littered with things that feel like chores as you try and get everything in order. And not every part of the process is easy to understand.
If you’ve been researching how to buy a new home or car, then you’ve probably heard the term “insurance binder.” It’s a common term that gets thrown around a lot when you’re preparing to make a home or automotive purchase.
Don’t worry if you’re confused by it. An insurance binder isn’t a big deal, and it’s not anything you need to fret about. Here’s everything you need to know about insurance binders with a little help from car insurance comparison and broker app Jerry.
RECOMMENDED
Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.
avatar
Judith switched to Progressive
icon savingsSaved $725 annually
avatar
Alexander switched to Travelers
icon savingsSaved $834 annually
avatar
Annie switched to Nationwide
icon savingsSaved $668 annually

What is an insurance binder?

An insurance binder is very simple. All it is is a few pages of paperwork that serves as temporary evidence of insurance.
When you purchase an insurance policy, whether it’s homeowners insurance or car insurance, you’ll agree to terms with an insurance agent on everything about your policy. This includes everything from the price you’ll be paying, to the deductibles, to the coverage provided by the insurance company, to the length of the policy.
After you’ve settled on the policy with an agent, the insurance has to run through a higher level at the company before being issued. At this point the company weighs the risks, and makes a formal decision. Because the agent has already agreed to it, it is almost always approved by the company, and rejections are rare.
However, that process can take a long time. Insurance binders serve as proof that you’ve agreed to an insurance policy, and evidence about the coverage contained within it.

What do you need an insurance binder for?

When you’re ready to get a new car, the dealership won’t sell or lease you the vehicle unless you can provide proof of insurance. Similarly, you often need proof of home insurance before closing on a house, apartment, or condo. An insurance binder acts as proof that you are covering the entity that you are buying.
Let Jerry find your price in only 45 seconds
No spam · No long forms · No fees
Find insurance savings (100% Free)

Why can’t you just use your insurance card or proof of insurance?

Insurance binders exist because there’s often a gap between when you sign up for an insurance policy and when you receive your insurance card or proof of insurance. After agreeing to the policy it can take a while for the company to underwrite the insurance, and then a while longer for them to send you the requisite paperwork. In the interim, your insurance binder serves as proof of insurance.

When don’t you need an insurance binder?

As soon as you receive your insurance card or proof of insurance, your insurance binder becomes useless. You only need it to prove that you have purchased insurance. Once you actually have a physical version of that insurance, the binder is no longer needed.

Does an insurance binder cost money?

No, it costs nothing to get an insurance binder. When you sign up for an insurance policy (whether in person, over the phone, or online) just request an insurance binder, and the insurer will give you one. This is a simple and easy process for the insurance agent, and will never cost you a cent.
An insurance binder is a simple concept, but it can be extremely important. Make sure you get one anytime you sign up for a new insurance policy. For the best deal, try car insurance broker and comparison app Jerry.
RECOMMENDED
Haven’t shopped for insurance in the last six months? There might be hundreds $$$ in savings waiting for you.
avatar
Judith switched to Progressive
icon savingsSaved $725 annually
avatar
Alexander switched to Travelers
icon savingsSaved $834 annually
avatar
Annie switched to Nationwide
icon savingsSaved $668 annually

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings — it's 100% free