Which term is described as a temporary contract until the policy is issued?

Which term is described as a temporary contract until the policy is issued?

• A. Appraisal
• B. Insurance
• C. Binder
• D. Subrogation

Answer: (C)

A binder is a temporary contract of insurance that goes into effect immediately to provide coverage until the formal policy is issued. It binds the insurer to cover the named insured for the specified risk, up to the stated limits, for a defined period. This lets the insured have protection right away while the policy is being written. The binder ends when the actual policy is issued, or when the binder term expires or is canceled, and coverage beyond that term isn’t guaranteed without the issued policy. The other terms don’t describe a temporary coverage agreement: a policy is the full contract, appraisal is a loss valuation process, and subrogation is the insurer’s right to recover payments from a third party.

A binder is a temporary contract of insurance that goes into effect immediately to provide coverage until the formal policy is issued. It binds the insurer to cover the named insured for the specified risk, up to the stated limits, for a defined period. This lets the insured have protection right away while the policy is being written. The binder ends when the actual policy is issued, or when the binder term expires or is canceled, and coverage beyond that term isn’t guaranteed without the issued policy. The other terms don’t describe a temporary coverage agreement: a policy is the full contract, appraisal is a loss valuation process, and subrogation is the insurer’s right to recover payments from a third party.