An insurance binder is a document that acts as temporary proof of insurance while an official insurance policy is still in the underwriting process. It’s typically used to provide evidence of required insurance coverage to mortgage or auto loan lenders when you buy a new home or car.

Types of insurance binder

Type of binder	When you need it	Coverage you’ll need
Car insurance binder	Financing a new car	Physical damage coverage (collision and comprehensive) plus state minimum coverage
Home insurance binder	Taking out a mortgage on a new home	Coverages A, B, C, D, E, and F
Business insurance binder	Purchasing business property	Building and contents coverage

How an insurance binder works

When you apply for a home or auto insurance policy, your application could be approved

within a few hours

. But in some cases, it takes a few days to issue an official policy, because underwriters need to review all aspects of your application—from the value of your property to your driving record—before they can approve it.

If you’re trying to get approved for a mortgage or auto loan at the same time, you’ll run into a problem—your loan or mortgage lender will require proof of property insurance (homeowners or physical damage auto insurance) before they’ll authorize your loan.

That’s where an insurance binder comes in. It acts as temporary insurance coverage that satisfies lender requirements, allowing you to finalize your loan while you’re waiting for your formal policy to be issued.

You can get a home or auto insurance binder by asking your insurance agent to issue one. In most cases, you’ll receive your binder document digitally, but you can request a hard copy if necessary.

When requesting an insurance binder, keep in mind:

Most auto and homeowners insurance binders are valid for 30 to 90 days, or until your application is denied or approved

If your binder expires without an actual insurance policy in place, you will be uninsured.

Any coverage listed on your insurance binder is conditional upon issuance of your official insurance policy.

What information is typically included in an insurance binder?

An insurance binder typically includes the following information:

Insured information: The names of the named insured and any other insured parties.

Insurer information: The name of your insurance company, along with contact information for your insurance agent.

Binder number: A policy number for your temporary coverage.

Property information: Specifics regarding the vehicle or property you’re insuring.

Dates: The effective dates (start and end date) of the insurance binder.

Coverage information: Types of coverage, coverage limits, and deductibles.

Perils: Named perils covered by the policy.

What does an insurance binder look like?

A typical insurance binder is a basic document, a few pages in length, summarizing key information about your insurance coverage.

You can see a sample ACORD insurance binder, issued by the Association for Cooperative Operations Research and Development (ACORD), on the U.S. Securities and Exchange Commission’s website.

Not all insurance companies issue binders

While binders are a common step on the way to an official insurance contract, not every company issues them. It’s a good idea to ask early in the insurance application process to ensure you’ll be able to get a binder if necessary.

What to do before your binder expires

An insurance binder is temporary. It will expire at the end of the effectives dates printed on the document, and when it expires, you won’t have insurance coverage unless a formal policy has been issued.

Before your binder expires, make sure to finalize your actual insurance policy. If your policy is denied after a binder is issued, you’ll need to shop again for a new insurance policy to finalize your coverage.

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FAQs

How long is an insurance binder good for?

A temporary binder for an auto or homeowners insurance policy is typically good for 30 to 90 days. To check the expiration date of your binder, simply check the document for effective dates.

Is insurance binder and declaration the same thing?

No, an insurance binder and a declarations page are not the same thing. A binder is a temporary policy document that offers proof of insurance before a new insurance policy is issued, while a declarations page gives a summary of the policy once it’s officially issued.

Is an insurance binder the same thing as a certificate of insurance?

No, an insurance binder isn’t the same thing as a certification of insurance (COI). Both policy documents act as evidence of insurance, but a binder is a temporary document while a COI lasts as long as the policy.

Why do you need an insurance binder?

You may need an insurance binder to provide proof of insurance coverage to a real estate broker or car dealership during a home or car purchase. The binder providers evidence of coverage while your actual car or home insurance policy is still being underwritten.

Can an insurance binder be used as proof of insurance?

Yes, you can use an

insurance

binder as proof of insurance in certain situations while it’s still effective. Car dealerships and real estate brokers may accept an insurance binder as proof of insurance—but it may not be accepted as evidence of coverage at a traffic stop.

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R.E. Fulton is an expert insurance writer specializing in car ownership topics from car shopping and loan advice to insurance and repair guides. R.E.’s mission is to create unique and accessible content that helps readers to become more successful and independent car owners. R.E. has written and edited over 900 high-performing articles for Jerry, with an average of 1 million+ views.

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Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars.

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