Property and Casualty Insurance Practice Exam

What is typically the duration of a binder?

1. Up to 15 days

2. 30 to 60 days

3. 90 days

4. No set duration

The correct answer is: 30 to 60 days

In property and casualty insurance, a binder serves as a temporary agreement or insurance contract that provides coverage until the actual policy is issued. Typically, the duration of a binder is usually around 30 to 60 days. This timeframe allows sufficient time for the insurer to complete any necessary underwriting requirements and issue the permanent policy. During this period, the insured is generally covered as outlined in the binder, providing assurance and protection while the final details are finalized. While a binder could theoretically have other durations based on specific agreements or circumstances, the 30 to 60 day range is the most common and widely accepted standard in the insurance industry. This timeframe balances the need for prompt coverage with practical considerations of the underwriting process, ensuring that both parties are protected during the interim phase.