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Insurance Binders Made Easy

If you are buying a home for the first time, you may find yourself asking a simple question: "What is an insurance binder?" After spending months searching for the perfect home, first time property owners are supplied with an unwieldy list of documents required for the mortgage closing. One of these documents is the home insurance binder. 

If youre a first time home buyer cover yourself with homeowners from Gordon Insurance

An insurance binder is a one page document showing the insurance company's written commitment to insure something, such as a newly purchased house. In other words it is a temporary issuance of proof of insurance that will cover or "bind"  coverage until the formal policy is issued. The binder may be issued by the agent or the company. Typically, a home insurance binder is issued for a 30 day period. This allows ample time for the company to process and print the actual policy. The customer receives the actual policy within this window. The insurance binder itself lists the home insurance coverages, property location, policy period, annual premium and mortgagee information. Typically, the bank or mortgage company will request that the insurance be paid in full for the closing, and that the binder state that it has been paid in full. This may be paid to the agent or sometimes it is collected at the closing.

While the binder is a simple document, a lot goes into its preparation.

Our agency, www.agordon.com, keeps it simple for you. While we work well under pressure and can usually produce a binder very quickly, we so recommend at least a couple weeks advance notice of a closing to gather information, then give you time to consider your options deliberately. 

Here are the steps, many of which happen here behind the scenes:

  • First, we determine the amount of insurance needed to replace your property. 
  • Next, we quote with our different carriers, and compare from all available companies to secure the best  pricing.  We may coordinate with your auto carrier to take advantage of account discounts.  
  • Here's where you make a selection on deductibles, insuring jewelry and other coverage options.

Once you've decided on a company, insurance reports for prior claims and credit are checked to make sure all meet the guidelines of the insurer. After you satisfy these guidelines, we prepare an application for you to sign so we may bind coverage. A signed application may be emailed or faxed to expedite the release of a binder. In many cases, agents have binding authority. A copy of the binder is then transmitted (faxed or emailed) to the closing attorney or the mortgage broker in advance of the closing.

For a short video on this same subject, visit our homeowners insurance video library and click "For New Home Buyers".

Home buying is stressful enough but securing an insurance binder can be a simple process. Our agency, Andrew Gordon Insurance, can make sure your insurance is properly in place and the binder delivered quickly for a smooth mortgage closing.

If you're moving to Massachusetts, check out our New to Massachusetts blog for lots of how-to steps you'll be taking after you've bought your new place, including how to get a new license, tags, public transportation info and plenty of South Shore local town info as well.

Kasey McCarthy

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