An insurance binder is a written, temporary proof of coverage, usually good for thirty or sixty days. The insurance agent usually provides a binder if they cannot print that policy in-house.

In Texas, binders are frequently used for commercial policies. The insured negotiates rates and coverage to within a few days of renewal, or opening a new business, and the insurance company cannot print the policies on time. The agent then provides a binder outlining coverage in force.

Binding coverage usually involves signing applications and depositing premium with the agent. Read the binder carefully and be sure all desired coverage appear on the binder. Each schedule does not require enumeration; for example, each vehicle does not need to be listed, but the business automobile limits of liability and physical damage coverage should be outlined.

If you are switching carriers, attach your old policy to the new binder to reference fleet, property, and liability schedules.

The same is true for homeowners and automobile policies. A binder is completely legitimate; however, it’s getting more rare that an agent doesn’t just produce the policy in-house. If you receive a binder, attach the replaced policy as a scheduling device.

Do keep track of time. The binder expires in a relatively short timeframe. Either ask for a new binder or the policies fifteen days before your binder expires.

Many people find an insurance company when they purchase a vehicle or a home, select a policy, and pay premiums for years without analyzing their coverage or comparing similar policies from other insurance companies. Although you may feel comfortable keeping your insurance with the same Texas insurer for a decade or more, you could be doing yourself a disservice.

Reputation

Your insurer’s reputation is very important, as it gives you an idea of how your insurance company may react in the event of a claim. When you get into a car accident or experience a catastrophic event that causes property loss, the last thing you want is a hassle from the insurance company. Instead, it is important to periodically review your insurer’s reputation with other customers, the Texas Department of Insurance and the Better Business Bureau. Find out how quickly claims are handled, and whether or not your insurer has a history of dropping customers who make more than one claim.

Cost

Cost is a major factor in choosing an insurer. Premiums can change over the years, as can the amount of coverage you need. Life events, such as credit history, claims history, driving records and the addition of young drivers can all affect a premium. The insurer that provided you with the lowest premium when you started driving or purchased your home may not be the most affordable option now. It is important to shop around and compare the rates of insurers periodically. It could save you hundreds of dollars in premiums each year.