A homeowners insurance binder is a document that you’ll get from your insurance agent that proves that you’ve bought homeowners insurance. The document essentially serves as a provisional insurance policy. As such, it contains your homeowners policy details, including the deductible and coverage limits. After you receive the official homeowners insurance policy, the binder becomes invalid. Here’s detailed information on this topic.
Who Needs a Homeowners Insurance Binder?
When buying a home, you also need to purchase a homeowners insurance policy. Your homeowners insurance policy will protect your residence as well as possessions from potential losses and damages. Moreover, mortgage lenders will typically require you to carry a homeowners policy if they are to finance your home.
When you get a new homeowners policy, it usually takes a few days to underwrite the policy and process the paperwork. The insurance binder serves as provisional proof of insurance up to when you receive the official policy. Homebuyers who need urgent proof of insurance need an insurance binder. You may also be required to carry a homeowners insurance policy if you’re refinancing your current mortgage. Because your insurance binder verifies that you carry home insurance, you should carefully examine the document to confirm that the details are accurate.
When Do You Need a Homeowners Insurance Binder?
You’ll need the insurance binder in the following situations:
- When You Purchase a New Property – When buying a new property, your home loan lender will need to confirm that you have a homeowners policy. Your insurance binder can be your proof that you have insurance until your official policy has been underwritten
- When You Finance Your Property – Whether you’re refinancing your property to get a better mortgage or refinancing a new property, you need to show that you have a homeowners policy to get a loan. If your home insurance policy is still being underwritten, your homeowners binder can serve as your proof of insurance.
- When You Purchase a New Homeowners Insurance Policy – When purchasing a new homeowners insurance policy, you need an insurance binder that outlines your new policy’s details.
Information Included in Your Insurance Binder
An insurance binder includes all the details that mortgage lenders need to understand the homebuyers’ insurance coverage. These include:
- Risk – The risk part of an insurance policy explains what’s insured. The risk in a homeowners policy is the property and dwelling. The binder outlines the amount of coverage on all the property covered by the policy.
- Identity of the Insured – The policyholder’s name is included in the insurance binder.
- Liability amount – The insurance binder lists the level of liability coverage that’ll come with the homeowners policy.
- Deductibles – Each section of a homeowners insurance policy has a given deductible. The binder lists the type of insurance coverage, the amount of coverage, and the deductible amount.
- Insurer and Type of Coverage – The binder lists the name of the insurance carrier as well as the type of insurance.
- Effective Dates – The binder outlines the period within which the document can be used as proof of insurance. The insurance binder usually becomes ineffective once the official homeowners policy becomes active.
- Identity of Insurance Agent – The binder lists the insurance agent who approved the document.
- Terms of Insurance – While there may be minor changes in the final policy, the terms listed on the binder are typically similar to those on the home insurance policy.
How Do I Get a Home Insurance Binder?
You’ll get your insurance binder from your insurance agent. If you need a home insurance binder, contact us today. At Premier Risk LLC, our insurance experts will create a customized homeowners insurance policy that will adequately protect you and your home.