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Written by: Shelly Campbell

Category: Services

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After you negotiate through the maze of insurance options for your car, home, or business and agree upon a price, we will be the portal through which you apply and pay the down payment. We call this process binding. The proof of insurance we issue you as a receipt or certificate is called the binder. This paper or electronic document will state the time and date obligating the insurance company to begin coverage of the property or the liability you might incur from your personal or business activities.

Be aware that the binder does not guarantee that the insurance company will continue insuring you for the specified policy period you have requested. The insurer may take time to look at all the data with human eyes and modify or deny coverage. Legally, they must act to make that decision in a specific period. The company may not leave you wondering if you have insurance. Suppose they decide not to accept your application. In that case, they must give you a notice with a short extension of coverage so you have time to look elsewhere. There are exceptions to this underwriting period. Companies may void a policy or binder from its inception for such things as your down payment failed, or you intended to defraud the company. The insurer may sometimes need more time and offer a binder renewal option.

When the underwriting period has ended, you can comfortably continue paying for the insurance and feel confident the insurer will extend the coverage you purchased to the end of the contract period. We call this the policy period or lifecycle of the policy. The policy period may last one month or go on for a year.

Once the policy period approaches its end, the insurance carrier, at its discretion, may extend the contract for another period. They call this the renewal. When the renewal offer arrives, it is a great time to review the people and property covered and the limits to ensure they are still appropriate. You can adjust the original policy during the policy period or at renewal. These are called policy changes. We will explain the changes in the following article.