My lender is asking for an insurance binder. What does an insurance binder actually mean?Īn insurance binder is a short document that verifies your insurance coverage before your policy is issued. When you apply for and purchase insurance, the insurer doesn’t generate your policy documentation immediately. There’s a processing lag - usually 10 to 30 days - while the insurer verifies your information and documents your coverage internally. At that time, you’re likely to need proof of insurance, and that’s where the binder comes in. Insurers issue these binders immediately and stand in as evidence of coverage until you receive your full policy documentation.Īll types of insurance issue binders - car, motorcycle, home, boat insurance, business insurance, and even livestock insurance. Technically, a binder is a legal contract. The binder functions as proof of your coverage if you need to file a claim before your policy is issued.
