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What Is An Insurance Binder For A Car?

A car insurance binder is proof of purchase of your auto insurance. Before everything is finalized, it lets others know that you have purchased insurance. The point of proof of insurance is to give the insurer time to verify your data, and it protects you from legal trouble if you were to be pulled over or get into an accident.

An insurance binder is considered temporary car insurance until the insurance company verifies your information. It is meant to buy you more time, especially if you need to drive your car before the underwriting process completes. It applies to the type of coverage you purchased. If you purchased liability insurance, then you are covered for liability damage. If you did not purchase full coverage, then it does not cover full coverage damage. 

What Information Does The Insurance Binder Include?

The insurance binder applies to everyone who applied for insurance coverage. Putting multiple people on your insurance means that anyone on that insurance can use the binder. It also includes the type of coverage and the deductible.

The insurance binder should have the information needed to cover your car. This includes the VIN number, the vehicle make, and the vehicle model. It may also include the names of the insured and the type of coverage. 

You may also find the amount that the insurance binder temporarily covers. This is not reflective of your actual insurance policy, and it may be less or more depending on the company. The insurance binder also informs you of deductibles in the event of an accident.

Finally, the binder is connected to the insurance agent who works to approve your policy and insure you. This is the insurance agent to contact if you run into any issues. 

Does My Insurance Binder Reflect My Insurance Coverage?

The insurance binder does not reflect the amount of insurance that you will get. Once your insurance policy goes through, it might equal more or less than what is on the insurance binder. 

This type of insurance coverage is common for online insurance. Once you purchase online insurance, you can instantly receive an insurance binder. Getting coverage is as simple as printing off that binder letter. Once the letter is printed, your car is legally covered by insurance.

Most insurance binder letters have expiration dates. It is important to be familiar with the expiration date because some auto insurance companies processes take a long time. If need be, it may be possible to get an updated insurance binder 

What Is An Underwriting Process?

The underwriting process is the insurance company’s way of validating your information. While they undergo the underwriting process, they provide you with an insurance binder. 

During the underwriting process, the auto insurance company likes to verify your address and vehicle. They may also check your credit score and driving history. Any discrepancies in those things may cause the insurance company to decline your application or boost your premium. 

As a precaution, they also check to see if you already have insurance. Having two different insurers on one car is legal, but it can get complicated. Some insurance carriers do not allow double insurance. 

If you are denied after the underwriting process, the insurance binder becomes obsolete. You are no longer legally insured. Once the insurance company declines your application, you must apply elsewhere to be legally insured.