A temporary agreement that provides insurance coverage until a formal policy is issued. Binders are commonly used in property and auto insurance to ensure you are covered immediately while the insurer completes underwriting.
Related Terms
Agent
A licensed individual who sells insurance policies on behalf of one or more insurance companies. Captive agents represent a single insurer, while independent agents can offer policies from multiple carriers, giving consumers more options to compare.
Effective Date
The date on which an insurance policy begins providing coverage. No claims can be filed for events that occur before the effective date. It is listed on your declarations page and is sometimes different from the date you purchased the policy.
Underwriting
The process insurers use to evaluate the risk of insuring a person or asset and determine the appropriate premium. Underwriters review applications, claims history, credit scores, and other data to decide whether to issue a policy and at what price.