Your lender cannot start the loan process without an insurance binder. To make sure you have homeowner’s insurance, your bank, your mortgage firm, or any other agency or firm who deals with the financial end of homebuying, is going to need an insurance binder so that you can get a loan to close. Why do I need an insurance binder prior to closing on a property?īefore you buy a home, your mortgage lender is going to require that you have homeowner’s insurance. To sum things up: a binder is one-page contract issued by your insurance company that guarantees that you’ll be insured at the time of close. Information about the insurance company.There are a few important details outlined in an insurance binder, including:
They call it a binder because the contract “binds” an insurance policy that does not yet exist. Not at all.Īn insurance binder is usually just a one-page document. You may be curious: Does an insurance binder look like one of those three-ring binders you used in school? The answer is, no. This contract is a guarantee by the insurance company that they will insure your home at the time of close. Put simply, a binder is a temporary contract issued by an insurance company.
