An insurance binder is a temporary insurance policy that allows you to drive a recently purchased vehicle until your actual coverage starts. Here’s how it can help when you’re purchasing a vehicle.

Insurance Binders and Car Buying

If you’re about to buy a car, but you haven’t chosen an official insurance policy, it could mean trouble. Most dealerships require that borrowers have proof of insurance before they drive off the lot – and lenders require that to be full coverage auto insurance.

That’s where an insurance binder can help. A binder’s purpose is to fill in in case there is a reason why the actual policy can’t start right away, typically due to finishing up the underwriting process. Even though it’s called a binder, it's only a temporary insurance contract for your vehicle – and it's usually only a few pages of paperwork, not an actual binder like the name suggests! It acts as the proof of insurance required to finance or purchase a car from a dealership and allows you to drive it on the road after you take delivery.

What Is an Auto Insurance Binder? Most insurance binders are only good for around 30 to 90 days, giving the insurance company time to activate your policy, or giving you some time to choose a policy that’s right for you. A binder typically contains a summary of information such as:

  • Your name
  • Insurance company’s information
  • The vehicle’s information
  • Coverage inclusions and exclusions
  • Deductible
  • Premium
  • Expiration date

How to Get an Insurance Binder

Getting an insurance binder is usually pretty simple: call an insurance company and request one. However, insurance binders aren’t typically even necessary nowadays. With today's mobile technology there's more of a chance that you could have proof of insurance right away for your vehicle purchase.

Many bad credit borrowers are able to get auto insurance immediately, and you may not need a binder at all if the policy can be started right away over the phone or online. But if you can't, the finance and insurance (F&I) manager at a dealership can typically offer you a seven to 30-day binder which allows you to complete your financing and take delivery of your vehicle.

In fact, one of the most common places to get an auto insurance binder is from the dealership through a temporary insurer, until your specific lender can finalize your insurance policy on your new (or new to you) car.

If you need to see whether or not you need an insurance binder for your upcoming vehicle purchase, or if you’re looking for an auto insurance policy, check out our resource center to compare rates in your area for free.

Looking for a Car Loan?

If you’re in need of an auto loan, but your credit score isn’t up to par, then we want to help with that, too. Here at Auto Credit Express, we’ve created a coast-to-coast network of dealerships that are signed up with subprime lenders. These third-party lenders can assist borrowers with unique credit situations to help them get the vehicle financing they need.

To get matched to a dealer in your local area that’s signed up with subprime lenders, complete our free, no-obligation auto loan request form.