When you have business insurance policies you will often hear talk of your insurance binder and your certificate of insurance, but do you know the difference?
A binder is a contract of insurance. It’s called a binder because it “binds” your coverage creates an insurance contract and is used temporarily until the policy is issued.
A certificate of insurance is a form of proof of insurance warranting that you have coverage for a specific period.
Binders
An insurance binder is a brief document that serves as a temporary insurance policy. It remains in effect for a short time, typically 30 to 90 days. A binder dissolves once the policy is issued.
Binders will often be required by lenders when a business takes out a loan. For example, if you are buying a new building and taking out a loan, the lender will often require you to insure the building against physical damage under a commercial property policy and will want to see the binder as proof of that coverage.
A binder may be issued by an insurance company or by an insurance agent on the insurer’s behalf. An agent can issue a binder only if they have been afforded binding authority (the authority to initiate coverage) by the insurer.
Insurance brokers don’t have binding authority because they don’t serve as representatives of insurers. A broker may issue a binder, but the document will not be valid until it is signed by an underwriter or other authorized representative of the insurer.
A binder provides general information about your company, your insurer, and your agent. This includes:
- Your agent’s name, address, and contact information
- Your company’s name and address
- Name of your insurer
- Binder number
- Binder effective dates
- Policy number
- Description of your operations, vehicles, or property to be covered.
A binder is typically divided into sections, each applicable to a specific type of coverage, such as general liability or workers’ compensation. For each coverage you have purchased, the binder should list the limits provided, the coverage forms that will be included, and key endorsements that will be attached to your policy.
Certificate of Insurance
A certificate of insurance is a single-page document that lists active, in-force insurance policies for a business.
Certificates of insurance are often requested when one business engages the services of another and wants proof that the other business has secured the necessary coverage.
A standard certificate will list all of your coverages, the name of the insurance company, and the policy’s effective date and expiration.
A certificate of insurance contains separate sections for different types of liability coverage listed, such as general, auto, umbrella, and workers’ compensation. “Insured” refers to the policyholder, namely the person or company who appears on the certificate as being covered by the insurance.
In addition to coverage levels, the certificate includes:
- The policyholder’s name.
- The policyholder’s mailing address.
- A description of what is insured.
- The name and address of the insurance company, as well as contact information for the insurance agent or broker or their contact person.
Having a certificate of insurance shows potential clients or business partners that your organization is insured. That means that in the event of an unforeseen scenario like an injury or property damage, there is minimal risk of out-of-pocket payouts or unpleasant and expensive litigation, for you or your customer.
BGES Group, located in Larchmont, N.Y. are New York Construction Insurance Specialists that represent 50+ companies and all the BEST general & umbrella liability programs! We offer every coverage you need including property, builders risk, inland marine, general liability, umbrella liability, auto, bid & performance bonds, workers’ compensation, N.Y.S. disability and group health. We are extremely responsive, responsible, trustworthy, fast, minimize your insurance headaches, we don’t charge ridiculous policy or service fees and when you call, text or email, whatever time of day, even weekends, we are there to help YOU!
BGES Group are Workers’ Compensation Insurance Specialists for Tri-State Business Owners: Unhappy with your rates, company, being cancelled, losses causing difficulty getting coverage, in the middle of an audit dispute, payrolls misclassified, whatever your issue, we can help! We have special programs for: Auto Service, Contractors (especially New York), Limousine Services, Logistic Companies, Manufacturers, Recyclers, Truckers, we can help ANY tri-state business owner. We are considered “Preferred Agents” for this one program that if we can get you into their pricing is excellent, offers long-term coverage stability and can cover multi-state operations. Program takes the hassle out of doing annual audits too.
If you would like to speak with us call Gary Wallach at 914-806-5853 or click here to email or click here to visit our website.
Company: BGES Group, 216A Larchmont Acres West, Larchmont, NY 10538
e-mail: bgesgroup@gmail.com
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