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

That’s where an insurance binder can help. 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.

If you’re about to buy a car, but you haven’t chosen an official insurance policy, it could mean trouble. Here’s how it can help when you’re purchasing a vehicle. An insurance binder is a temporary insurance policy that allows you to drive a recently purchased vehicle until your actual coverage starts.

Car insurance binder