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Insurance Binder
An insurance binder is a legal document that provides the details for a temporary insurance arrangement. For example, if the owner of a property becomes involved in a sales contract with a buyer, he or she would require the buyer to provide proof of insurance. For the buyer to receive a binder, he or she must provide all information about a property to his or her insurance company. At this point the insurance company has the necessary information to determine the levels of insurance that the buyer would need to satisfy the sale of the property. When the buyer pays the down payment, he or she is issued an insurance binder with a specific expiration date. At this point the buyer has satisfied proof of insurance, so the sale may continue. Although the transaction continues, the binder is only temporary, so the buyer must obtain a permanent policy before the expiration date.