What is an Insurance Binder?

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When you purchase homeowners insurance, it might take a few days for the policy to become final. But during that time, you might need proof of insurance to show a mortgage lender or other legal personnel. That’s where an insurance binder comes in: an insurance binder provides you with proof of coverage while your formal insurance policy documents are being prepared.

Insurance binders are 30- to 90-day, temporary insurance contracts that prove you have coverage while you wait for the official policy documents. Read on for more information about how these binders work and how to get one if you need it.

Key takeaways:

  • An insurance binder is a temporary proof of insurance that is valid for 30–90 days.
  • Your insurance company typically issues the insurance binder automatically.

What is an insurance binder?

Insurance binders are temporary documents that prove a formal insurance policy is being prepared. They act as proof of insurance in the event you need documentation of coverage before your formal policy documents are available. Typically, these binders are useful when purchasing a home or a car that will require payments, such as with a mortgage or other financing. Please note, these are short-term safety nets that aren’t permanent solutions — they’re more like background support making sure you won’t get yourself in trouble before your formal documents are given to you by your insurance provider.

What is a home insurance binder?

To put it simply: a home insurance binder is a temporary proof of insurance that will have your back until your actual homeowners insurance documents are available. Sometimes, home insurance policies take a few days to go through the underwriting process or because paperwork is processing. In the event there’s time between the date you purchase your policy and the date these documents are available, you’ll want to get a home insurance binder to serve as proof of coverage.

What does an insurance binder include?

A home insurance binder breaks down the complete details of your policy. The binder will include important details about your policy, such as your coverage amount, what’s being insured, any deductibles and your policy’s type and provider.

Insurance binders break down:

  • What’s being insured
  • Liability insurance amount
  • Deductible amounts
  • Named insureds
  • Name of insurance company and type of insurance
  • Policy number
  • Term of insurance
  • Name of the insurance agent

When do I need an insurance binder?

You won’t always need an insurance binder — for example, if you purchase a policy that immediately goes into effect. The most common scenarios when you’ll want to get a binder are closing on a house or buying a new car — times when you might not have full coverage yet, but your lender might want to make sure you’re covered. If there is time between purchase date and when your official insurance documents are available to you, you’ll need to have an insurance binder.

How to get an insurance binder

If you end up needing an insurance binder, you’ll most likely get one from your insurance provider automatically once you buy a policy. If you aren’t automatically issued one, all you have to do is call your insurance company and request one is mailed or emailed to you.

Like Hippo, most insurance companies activate your policy the same day, in cases like these you won’t need an insurance binder at all.

Insurance binder vs. declarations page

Both an insurance binder and a declaration page are short summaries of your actual insurance policy. However, they differ in permanence. A declaration page acts as a permanent summary of your policy and is valid throughout the term of your policy. On the other hand, an insurance binder is meant to be a temporary proof of insurance that is only valid for 30–90 days.

What if my insurance binder expires?

If your insurance binder expires, it can no longer serve as proof of insurance. If this occurs, it’s important to check with your insurance provider immediately that your policy is active.

It’s best practice to keep tabs on the expiration of your insurance binder. If that date is fast approaching and you haven’t received your formal policy yet, give your insurance company a call ahead of time.

Once an insurance binder expires, it is no longer valid proof of insurance.

We all need to be protected. Home insurance is one of the many safeguards that can help you in the event of an accident or disaster. Don’t let yourself get caught in a bind — let Hippo provide you with a quote.