Policy Structure & ProvisionsQuestion 454 of 474
A binder issued by a producer serves to:
a.Cancel the insured's coverage back to its start date
b.Give temporary evidence of coverage until the policy issues
c.Permanently replace the policy the insurer will issue
d.List the exclusions that will apply to the new policy
Explanation
A binder is a temporary agreement, oral or written, that provides immediate evidence of coverage until the insurer issues the formal policy or declines the risk. It contains the essential terms so the insured is protected in the interim. A binder is not permanent and is replaced once the actual policy is delivered or the coverage is formally declined.
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