What is a binding agreement that provides temporary insurance coverage before the policy is issued?

A binder is a temporary agreement that provides insurance coverage until a formal policy is issued. This type of agreement serves as a commitment from the insurance company, ensuring that coverage begins immediately, even if the full policy documents are still being processed. Binders are particularly useful in situations where there is an urgent need for coverage prior to the completion of underwriting or policy issuance.

Endorsements, on the other hand, are modifications made to an existing insurance policy, altering its terms or coverage. An addendum typically refers to supplementary material added to a document but doesn't imply coverage itself. A quote is simply an estimate of the premium for coverage and does not provide any coverage until a binding agreement is established. Thus, the role of the binder is crucial for ensuring that clients have coverage in place while the insurance policy is finalized.