What is an insurance binder?

An insurance binder serves as a temporary placeholder when you start up a new insurance policy. It is used as proof of insurance until your formal policy is issued. Sometimes issuing a new policy can take time, so insurance agents will provide applicants with a binder to prove in the meantime that they do, in fact, have insurance.

Let’s explore what’s included in an insurance binder, in what circumstances you’ll be issued one, and why you might need it.

What does an insurance binder include?

An insurance binder looks a lot like regular policy documents that are given to applicants once they pay for a policy. It displays similar information to a declaration page, including the amount and type of coverage, effective dates, names of insureds, and any coverage limits, deductibles or endorsements. It is issued by your new insurance company and can be one or more pages in length.

Do all companies give insurance binders?

As technology has progressed and processes like buying insurance and drawing up paperwork have become much quicker, not all insurance companies need to engage in providing binders anymore. Most insurers issue policies quickly enough that a binder is unnecessary. They may also skip the binder by simply writing the policy with a future effective date — this is sufficient enough within the scope of homeowners insurance as mortgage lenders will accept this as adequate proof of coverage.

Insurance binders vs. certificates of insurance

Insurance binders differ from a certificate of insurance as the former is not representative of a long-term policy and the latter is. An insurance binder, at its core, is meant to be temporary proof of your intent to hold a true policy. The certificate of insurance is issued when the policy period begins, denoting the official policy effectiveness.


Types of insurance binders

Each insurance product has different guidelines for insurance binders, but they are most prevalent in homeowners and auto insurance. Let's take a look at both types and understand their functions. 

Homeowners insurance binders
Homeowners insurance binders

When purchasing a new home, it's common for future homeowners to go through a lending association to fund their mortgage. Mortgage lenders almost always require applicants to hold homeowners insurance in order to be granted a loan.

An insurance binder provides the lending company important information on your coverage, which they will review and use to verify that you have signed up for insurance coverage that meets their standards.

Car insurance binders
Car insurance binders

Similar to a home insurance binder, a car insurance binder is used to show proof of insurance when you finance through an auto loan or lease a vehicle. Binders allow you to drive your new car off the lot — dealerships will require that you submit the binder as evidence of insurance before letting you leave with your new vehicle, verifying that you will be covered as soon as you step inside the car and take it off the lot. Auto insurance differs from homeowners insurance as it is legally required to hold in 49 states (New Hampshire is the exception).

How to get an insurance binder

Acquiring an insurance binder is as simple as contacting your insurance provider and requesting one. As mentioned earlier, not all companies will even need to issue a binder as the process for enrolling in an auto insurance policy is almost instant. In some cases, insurers may issue your policy immediately and your new policy is active right away, fulfilling the need for proof of insurance. Only if the underwriting process takes more time will you need an insurance binder. Most likely, the binder will be sent to you digitally and this is sufficient enough for the dealership and you won’t have to wait there for extra time.

If you’re adding a vehicle to your policy or getting new insurance for a new vehicle, it’s always a good idea to compare quotes with different car insurance companies to ensure you are getting the best rate for your situation. The Zebra’s quote tool below compares quotes from over 100 providers, and licensed insurance agents are available to secure a policy over the phone.

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I was billed for forced car insurance even though I already had it

While it can vary by the individual policy procedures of your lender, they should be able to backdate those charges if you're able to show proof of insurance for the duration of the loan. You can request a policy declaration or binder from your insurance company which will show the date of policy inception.
Jun 7, 2018 Glendale, AZ

If I go through The Zebra to get insurance, will I receive the proof of insurance today?

Whether you decide to purchase insurance through The Zebra online or over the phone, you will receive your proof of insurance before you hang up. As long as your down payment is received, your policy can become active and documentation can be generated.
Sep 16, 2021 Lake Charles, LA

Do I need to keep a printed insurance card in my vehicle or can I show digital proof of insurance on my phone?

As of May 2015, 42 states allowed for digital proof of insurance rather than a paper ID card. That is seven more states than in 2013 so there is potential that within the next few years every state could allow for digital proof.
Mar 14, 2016 Enid, OK

Would I avoid the penalties of a ticket for failing to provide proof of insurance if I got insurance before my court date?

Unfortunately, you likely won't be able to avoid any penalty for not having insurance. I would still recommend going to court with insurance — your judgment might be less severe if you resolve your uninsured status versus still being uninsured by the time your court date comes around.
Aug 25, 2019 Avondale, AZ

Renata Balasco photo
Renata BalascoContent Strategist

Renata joined The Zebra in 2020 as a Customer Experience Agent. Since 2021, she has worked as licensed insurance professional and content strategist. Her expertise in property and casualty insurance informs her work in creating expert home and auto insurance guides to educate shoppers. 

Renata previously worked as a content specialist for Lifespan, the largest hospital system in the state of Rhode Island. She holds a bachelor’s degree in French Language and Communications from The University of Rhode Island.

Renata's work has been cited by Car and Driver, The Balance and Fox Business