Binder
Definition
A temporary agreement that provides insurance coverage before the actual policy is issued. Binders are typically valid for 30 to 90 days and contain the essential terms of coverage. They are commonly used in real estate transactions when proof of insurance is needed before closing.
When This Matters
You are closing on a home in two weeks. Your agent issues a binder showing the property is covered, which satisfies the mortgage lender's requirement.
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