An insurance binder is a temporary legal document issued by an insurance company or agent that acts as proof of insurance coverage while an application is undergoing the underwriting process. It is a written agreement between the policyholder and the insurance company that outlines the essential details of the policy. Binders are typically valid for 30 to 90 days, depending on state laws, or until the official policy is issued or denied. Insurance binders can be used for various types of insurance policies, including auto, homeowners, and business insurance. They are often provided to lenders or other third parties to close on loans or contracts.

The details included in an insurance binder may vary depending on the type of policy, but typically include the policyholders name, the insurance company, the type of policy, the specifics of the property covered, the policy number, the policy effective dates, the covered perils, and the coverage limits. Insurance agents must be licensed and authorized representatives of the carrier to have binding authority on its behalf. Brokers, on the other hand, cannot issue insurance binders, even if they are licensed, because they represent their clients, not insurance companies.

In summary, an insurance binder is a temporary contract that provides proof of insurance coverage while a formal policy is being processed. It is a legal document that outlines the essential details of the policy and is often used to show evidence of insurance coverage to lenders or other third parties.