Only contracts can be cancelled.įurthermore, the policy terms are not usually shown on the binder. After all, why does a binder state that it can be cancelled? Evidences and certificates cannot be cancelled because they are not contracts. A good plaintiff attorney will ask, “Why did you issue a second contract unless you wanted the insured to have other coverage?” If you answer that you just did it so they had evidence of insurance, they might ask, “Why did you not issue a certificate of insurance? Or do you not know what you are doing?”Įven if you argue that a binder is harmless, the binder says it is a contract. Once a policy number has been issued by the company, the company has issued coverage and therefore the client has coverage. Why a company cannot get the paper policy printed and mailed within a couple days is baffling but beside the point.

It means a policy number has been issued by the company. A policy issued does not mean the policy papers have arrived. Part of the problem lies in agencies not understanding what it means that a policy has been issued.

Remember, a binder is written in advance of the issuance of an insurance policy, not after the issuance of an insurance policy.

However, if a policy – which is a contract of insurance – has already been issued, why issue another contract (a binder) just to prove insurance exists? In other words, why would anyone in their right mind write two contracts of insurance on the same risk? Yet this is what happens when one issues a binder on top of an existing policy. It is often used as an evidence of insurance. The Acord 75 field Description states, “A Binder is a temporary insurance contract which provides coverage in advance of the issuance of an insurance policy.” The Acord Insurance Binder form states, “This binder is a temporary insurance contract, subject to the conditions shown on the reverse side of this form.” A binder is a temporary insurance contract.

Insurance binder form