What is an auto insurance binder?

An auto insurance binder acts as temporary proof of insurance while your provider verifies your data. You can legally drive your vehicle with an auto insurance binder while you wait on your official insurance cards.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Written by Rachel Bodine
Insurance Feature Writer Rachel Bodine

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jun 6, 2022

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A car insurance binder is a form from your car insurer or insurance agent that provides temporary proof of coverage while the insurer verifies your data. Thanks to a binder, you can legally drive your vehicle with insurance coverage while the underwriting process is underway.

Once the underwriting process is complete and the insurance company has verified the policyholder’s information, you will receive your full coverage policy or PLPD insurance and no longer need your binder.

A binder is also known as a binder letter.

Make sure you get the right type of insurance for your needs. Enter your ZIP code to get vehicle insurance quotes in order to compare them and find the best price.

Do I need an auto insurance binder letter?

A binder is helpful for drivers who need to start driving their vehicle before the underwriting process is complete. In this situation, you can request a binder letter from your agency, although they may provide one automatically.

That binder letter will provide proof of insurance if you ever get pulled over. It will also provide coverage if you need to make a claim. You’re covered by your actual policy when you have a binder letter from your insurance agent.

Ultimately, a binder letter is temporary evidence of a type of temporary coverage you receive while the underwriting process is being completed by the car insurance agency. You need to hold onto your binder letter until you get a permanent proof of insurance card.

Remember: if you don’t have a binder letter in your possession while waiting for final approval from your car insurer, then you do not technically have the required coverage needed to drive your vehicle. In this situation, you’re an uninsured motorist with no coverage and it’s illegal to drive on any public road in the United States.

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What’s the difference between a binder and a regular auto insurance policy?

Typically, an auto insurance binder provides different coverage from your full policy.

During the underwriting process, the car insurance agency could discover information that changes your rates. You might receive less or more coverage than what’s outlined in your binder letter. Your rates might increase or decrease.

How do you get a binder letter?

If you’re signing up for a policy from a car insurance provider, then they’ll likely provide a binder letter once they’ve approved basic information on your application.

Binder letters are particularly common when buying coverage online. If you sign up for coverage online, then you may be offered instant proof of coverage in the form of a binder letter. You can print off that binder letter and be legally covered by your insurer. This letter is identical to the one you receive in the mail from an insurer during the underwriting process.

If you applied for coverage and have not received a binder letter, then contact your insurer immediately. Your insurer can mail a letter to your address, email a letter for printing, or make a letter available to be picked up at their local office.

Can binder letters expire?

Temporary binder letters may expire, which means you won’t have any coverage when driving. Make sure you check the letter to ensure it’s valid for all days on which you plan to drive.

Typically, the auto insurer gives themselves plenty of time to complete the underwriting process, which means your binder letter should easily remain active until you receive your full policy. However, it’s important to check the expiry date to make sure – especially if your underwriting process is taking a long time.

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What will the insurance company discover during the underwriting process?

You need a binder letter while you wait for the insurer to complete the underwriting process. What exactly is the underwriting process and what does an insurance underwriter do? What is the car insurance provider waiting to find out? Here are some of the things the car insurance company will explore during the underwriting process:

  • The type of vehicle you drive
  • Your driving history
  • Your credit score
  • Your address
  • Whether or not you have an active policy
  • How long you’ve been driving
  • The driving history of other licensed drivers in your household

Once the insurer has discovered this and other information, your actual insurance policy will be approved or denied, and you’ll receive your complete card in the mail. At this point, you can discard your binder evidence of insurance coverage. You’re now fully insured under your normal contract of insurance policy term.

If you’re shopping around to get better auto insurance policy costs on a type of policy, let us help. Enter your ZIP code to get quotes and compare today.

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