The biggest difference between a car insurance binder and an actual policy is that the binder is temporary. During this period of time, an insurance binder is absolutely essential. The agent needs a certain period of time to make sure you get a fair review and the right rates. It’s clear to see why the underwriting process is so important. This share comes in the form of your premium and deductibles. To ensure the business can pay claims when due, they share the risk with you, the customer. That’s where your premium comes in.Īn insurance company cannot cover your risk completely otherwise, it would have no money to pay out claims.

With the above rating factors, underwriters can assess your risk as a driver to help determine whether it makes sense to provide you with insurance and how much it might cost to offset that risk.

The location at which you park your car overnight.Your auto insurance history, including at-fault accidents.Your driving record and the driving records of any other drivers you want on your policy.The underwriting process includes review of rating factors (or factors that determine cost of your car insurance policy) that typically include, at a minimum: These car insurance underwriters use this information to: It is essentially how your car insurance rates are determined.ĭuring this process underwriters from your insurance company will verify the information you provided in your application. The underwriting process is very important in the insurance world. The time it takes to finish underwriting policies varies, but generally it should take around 10 days. A binder will act as your insurance until the underwriting process is through and your car insurance company issues you your actual policy. At its simplest definition, a car insurance binder is temporary car insurance.

Binder vs evidence of insurance