What is an insurance binder? How do I get an insurance binder?
You are purchasing a home or refinancing your mortgage and need a temporary binder as proof that you have an insurance policy. Your home insurance binder needs to meet the requirements of your loan. The binder must prove that your bank is listed as a mortgagee on your insurance policy. Your bank or mortgage company is requiring a binder because you have a mortgage on your home. The binder provides your lender with verified temporary proof that you have insurance. A binder also gives a summary of the coverage that is provided by your insurance policy.
The request for the binder may come from your attorney, bank, or mortgage broker. Some people refer to a binder as a certificate of insurance, proof of insurance, and evidence of insurance. Technically these are all different things but just be aware of this. You should receive a written request that has the binder requirements. When you talk to your insurance advisor make sure you provide the request. At Apple Valley Insurance we have extensive experience providing binders and can help you satisfy the requirements for your house purchase or your loan refinance. Reach out to one of our team members today for help obtaining a binder for your needs. The remainder of this article provides you with more information about insurance binders.
The information on a binder.
Listed is the information on your binder with a brief description:
Date – The date that your binder was issued or created. This is useful if there are changes to the binder. Your closing date or property description may get changed or updated and a new binder issued. You can look to at the issued date to make sure you have the most current and up to date binder.
Agency – Your insurance agency that issued the binder is listed so that any involved parties know who to contact with questions or changes.
Company – Your homeowners insurance company.
Effective Date – This is the effective date of your insurance binder. This date usually matches your closing date or the date you refinance. If you are purchasing a new home and insurance policy, the effective date of the binder will match the effective date of the insurance policy.
Expiration Date – This is the date that your binder ends. Most binders are issued for 30 days. Your binder is temporary proof of insurance that is replaced by the insurance policy within 30 days. Although your binder is issued for 30 days, in most cases your insurance policy will be issued for one year.
Insured and Mailing Address – The insured or purchaser of the property is listed. This area should list you along with anyone who is buying the house. Your mailing address is also included in this section. Your mailing address may not match the property location. When you have a secondary home or rental property the mailing address will not match the property description.
Description of Property – The description of property is listing the property that is being insured and financed. Sometimes this description needs to match the town records verses the mailing address of the property that is insured. For example, in Smithfield, RI the property mailing address could include Esmond, Greenville, or Smithfield and the description will list the property as being in the town of Smithfield. In Rhode Island it is common to have the mailing address of a property be different from the property address.
Coverages – The coverages section of the binder is a summary about the specific amount of insurance that your insurance policy provides. This will include the coverage amount on the dwelling, building or structure and the deductible that is on your insurance policy.
Special Conditions – Special conditions is an area used to include notes or details about requirements that the bank or mortgage company have requested. This area may also be used for clarification of coverage that is included in the insurance policy. This area is commonly used to include the policy cost or your insurance premium amount. In addition, this area may be used to indicate that the policy has been paid in full. You may be required to pay for one full year of insurance before the closing or at the closing.
Mortgagee Name & Address – The name and address of the mortgagee or lender along with the loan number is listed in this area. Your Lender will require that the address and name be listed exactly as requested. Getting the required lender name and address requirements in writing makes it easier.
Authorized Representative – The authorized representative is the name of the person at the insurance agency that completed your binder and has the authority to issue binders. The signature in this area completes the binder and makes it official.
All the information to satisfy the requirements of your closing attorney, bank, and mortgage broker are detailed and extensive. The best way to manage the fulfillment of your binder requirements is to provide your independent insurance agent with the contact information for your bank or closing attorney. Your trusted insurance advisor will know the questions to ask and will help expedite the issuing of a binder. The entire team at Apple Valley Insurance is available to help you navigate the insurance requirements. We can help you with a new home purchase or the insurance requirements of refinancing an existing loan.
Please note, this article was written to help you in general terms. Please consult an insurance professional to discuss your specific situation as it relates to things discussed in this article.
David Brush, CIC
Apple Valley Insurance
Apple Valley Insurance helps people and businesses with insurance needs. We are a locally owned independent business in Smithfield, RI. We serve all of Rhode Island and represent many insurance companies with various options. Contact us today for a review of your personal or business insurance program.