What is an Auto Insurance Binder
An auto insurance binder is simply a letter promising you temporary car insurance, issued to you by an auto insurance company. A Binder letter is provided to you once you make an initial payment with your auto insurance application and serves as your de facto insurance coverage until an official auto insurance policy has been issued to you by your auto insurance company. When you apply for auto insurance, the policy must be underwritten, which means your application must be fully reviewed and the risk assessed for insuring you. Since this underwriting period can take up to 60 days, the Auto Insurance Binder is an important element of initial coverage. (110 words)
How to Get an Auto Insurance Binder
An Auto Insurance Binder letter is issued to the consumer once the application for coverage has been submitted and the estimated first month’s policy has been paid in full. It is becoming more common that an auto insurance company can issue a policy immediately, in which case a Binder isn’t necessary; however, if the policy is more complicated (eg: written for more than one auto, different types of autos or a fleet), the insurance company can take up to 60 days to issue a policy. In this case, the Auto Insurance Binder is very important because it guarantees coverage before the final policy is issued.
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