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What Good is an Insurance Binder if the Insurer Doesn't Issue a Permanent Policy?

Sometimes an insurance company will not want to insure a piece of property after an agent who works for them has issued a binder. The point of a binder is to guarantee coverage for at least 30 days. Should a loss occur during that period the insurance company on which that binder was obligated must pay for the claim. That's the promise they make to the agent who wrote and issued the binder and therefore the promise they make to you and to the lender. But, during that 30 days the insurance company has the right to decide whether to insure the property or not. That decision making time is called the underwriting process. The insurer will check credit, past loss history of you or of the property. They will send someone out to inspect the property. If there is something about your or the property that doesn't meet their minimum underwriting requirements, the company has the right to cancel the policy but not until after the binder period. They do have to give you notice in writing of their decision to cancel the policy. They usually tell you the reason why in case there is something you can do to fix the property so it does become acceptable. If during that cancellation notice period you are not able to resolve the issue the carrier has with the property you will have time enough to look for another insurance company.