There are a lot of things to worry about when shopping for car insurance. One thing to consider that no one really talks about is finding a comprehensive insurance binder. This article will explain the purpose of an insurance binder and what one should look for when negotiating a binder for a new policy.
Everyone knows that it is dangerous and illegal to drive without car insurance. Driving without insurance can be extremely risky, both in terms of the law and in terms of one's personal finances. When purchasing insurance, a policy does not go into effect for several days. In order to keep safe and legal during this interim period, most insurance companies will issue a binder.
A car insurance binder is essentially a statement that provides immediate protection for the newly insured. It can be in oral or written form. Binders are designed to protect insurance customers from legal and financial trouble in the unlikely event that an individual gets into an accident during the processing period.
Insurance policy processing times vary by insurance company and by customer, but they can occasionally take quite a bit of time. During this processing period insurance companies run background checks on the potential customer's driving history, credit history and criminal history. An insurance company may even decide to deny coverage or charge higher premiums after this processing period, but they must always provide a binder during this time.
Car insurance binders are designed to protect the soon to be insured from bad timing and poor circumstance. Binders also force insurance companies to expedite the processing time frame. Without a binder, insurance companies would not be liable for accidents during this processing time. This would be extremely unfair for drivers attempting to get insurance. Additionally, without a binder insurance companies would be able to deny coverage to drivers based on their driving record during the processing period. This would mean that if an unfortunate driver were to get into an accident during this processing period, not only would the insurance company not have to cover damages, but they may actually be able to deny policy coverage altogether.
There are many forms of binders and most only last for a few days to a week. The most common binders are good for about ten days. If one is shopping for car insurance and decides on a policy, it is always wise to make sure that the insurance agent offers a comprehensive binder. Most agents will offer a binder that provides the same coverage as the desired policy. Some insurance companies will only offer the most basic binders. Obviously, a more comprehensive binder is the best, but anything is better than nothing.