What is a "Policy Binder"?

A policy binder serves as a temporary agreement that confirms coverage for the insured before the actual insurance policy is issued. It verifies that the insurance has been agreed upon, detailing the essential terms of the coverage provided, even if not all final documentation is complete. The binder ensures that the insured has immediate protection and outlines the critical aspects of the policy, like coverage limits and types.

In contrast, a summary of claims made would not represent a confirmation of coverage; instead, it would detail past incidents for which claims have been filed. A document detailing policy exclusions specifically addresses what is not covered by the insurance policy rather than confirming coverage. Lastly, while a notification that a policy has been bound indicates that the policy is officially in effect, it does not provide the immediate confirmation of coverage that a binder does. Therefore, the essence of a policy binder lies in its role as a temporary assurance of coverage until a formal policy is finalized.