Yes, we’re referring to popular new programs such as Progressive Snapshot.

Usage based insurance (UBI) is quickly being adopted by large auto insurance companies as a means to select drivers they prefer to insure, while providing these customers with lower premiums, according to a recent Weekly Credit Outlook from Moody’s .

How Usage Based Insurance Works

Insurers are using devices, known as telematics, which are installed in a vehicle to track various aspects of operation. The telematics report information such as mileage, time of day the car is in-use and how often the car’s brakes are applied vigorously.

This information helps insurers determine which of us presents the least likely statistical chance of having an accident and filing an insurance claim. And the lower your chance of filing a claim, the lower your overall insurance premium.

You’re not the only one saving money here. Your insurance company also saves big bucks by selecting drivers who don’t end up costing them money. It’s a win-win situation.

Keep in mind that this is not Mileage Based Insurance. MBI is a program where you guess how many miles you will drive in a given policy period. This type of insurance can be dangerous for an insured that guesses incorrectly and is forced to pay HUGE penalties for “going over.”

Which Insurers Offer UBI?

You may notice the insurers offering this product have one thing in common. Deep pockets. The cost to launch a product of this nature is keeping smaller insurers out of the market so far.

But they may be forced to get on board or potentially suffer financial consequences that outweigh the cost to implement UBI.

1. Progressive Insurance
2. Liberty Mutual
3. Nationwide
4. Travelers
5. The Hartford (announced they will offer UBI in the near future)
6. GMAC
7. Allstate
8. State Farm

Most of these insurers also make the list of companies with the biggest advertising budgets. Noticeably missing is GEICO.

TTAI wouldn’t be surprised if there were a Gecko-shaped telematics device in the works as this post is being written.

What’s the Future of UBI?

Over time, you should expect to see more and more car insurers adopting this technology. Those who don’t run the risk of being overlooked by consumers.

The companies that can’t (or don’t want) to go this route will be forced to insure “less attractive” drivers, as those that fall into this category will likely opt not to have their driving habits tracked – knowing their insurance premiums may actually increase as a result of being monitored.

After all, the “riskier” driver will certainly opt for an insurer who doesn’t track their vehicle usage and driving habits.

Is UBI Always the Cheapest Coverage?

While usage based insurance is a great idea for those who exactly fit the risk profile of the insurers who offer it, it is not always going to be the best deal around.

It is recommended you aggressively shop your insurance premium with an independent insurance agent who can compare several companies at one time.

They’ll help you find a company that doesn’t inflate their premiums in order to spend hundreds of millions of dollars in advertising each year.

A few of the insurers on the UBI list continue to have some of the highest car insurance rates out there – regardless of your vehicle usage or driving history.

So-called questionable claims increased seven percent in the first three quarters of 2011, compared to the same period in 2010, according to a new report from the National Insurance Crime Bureau (NICB).

Most of this year’s increases were associated with workers compensation and casualty lines (bodily injury).

Vehicle claims were largely flat, though “hail damage” increased 103 percent from the third quarter of 2010.

Insurance money has always been a target of unscrupulous individuals and/or companies. We’ve all seen the movie in which a struggling business owner burns down his restaurant in order to collect insurance money to stave off bankruptcy…and gets caught.

While those situations represent obvious fraud, the insurance industry also tracks “questionable” claims to identify industry-wide trends. This information helps insurance companies determine their future rates, which means the costs are passed on to us consumers.

Not surprisingly, as the U.S. economy continues to suffer, you might expect questionable insurance claims to increase overall. While there may or may not be a direct correlation between the two, our money is on “yes.”

What is a Questionable Claim?

A questionable claim may be any insurance claim where the “facts” don’t add up according to the insurance adjuster. There are literally millions of potential scenarios, but we will highlight just a few based on the results of the study.

Casualty – This type of questionable claim may be very common in the form of personal injury protection coverage in Florida, and is usually associated with “soft tissue” damage that results from an auto accident – or staged auto accident. For example, a casualty claim may be flagged as questionable if an insured claims to have soft tissue injury as a result of a 3 mph fender bender in a parking lot. While it’s certainly possible, it is highly unlikely that an individual would suffer any injury from this type of accident.

Workers Compensation – Again, this type of insurance is an easy target for fraudulent claims due to the potential for soft tissue damage. A worker may have a minor slip and fall at work and then claim to be unable to work for six months. While there may have been no verifiable bodily injury (broken bones, swelling, torn ligaments) an individual may claim they are unable to perform their duties at work based on “pain” that cannot be verified.

Final Word

Insurers record and evaluate every discernable data point they can get their hands on in order to protect their bottom line. Their pricing models are based on previous loss experience for every type of claim that has been filed and tracked.

The main goal is to be able to offer the cheapest insurance possible while still making a profit. The cheaper their insurance, the more policies they sell.

Insurance fraud leads to higher prices for everybody. The cost of claim payments is passed on to the consumer in every instance. The only people who win are the ones that commit insurance fraud and get away with it. Everyone else loses.

Personal injury protection can be an important additional auto insurance coverage. In fact, some states consider this coverage so important that it’s mandatory. This means your car insurance policy HAS to have it and you HAVE to pay for it. In Texas, while PIP is technically mandatory, you can reject the coverage, in writing, as part of your application.

In some states, this mandatory coverage results in substantial insurance fraud costs, which are simply transferred directly to the consumer. Case in point: Michigan has the highest auto insurance premiums in the country. Why? They have mandatory unlimited PIP limits on every policy. Someone gets injured in a vehicle and can collect as much money as they want. Ouch!

What’s Going On in Florida?

According to the Miami Herald, “the state [FL] leads the nation in staged car accidents and questionable claims.”

As a result, a new coalition named Gear Up Florida has started a crusade to reduce this “epidemic” or insurance fraud. Their main goal is to get the Florida PIP laws changed to make it more difficult to take advantage of the system, which is bleeding citizens dry by causing insurance rate increases.

How the Scam Works

Unscrupulous individuals stage car accidents in which several of their passengers suffer “soft tissue” bodily injury. This type of injury is tough to dispute, as there are no broken bones, and no visual proof of “actual” injury.

Basically, the perpetrators say they are hurt and in pain. Then they seek medical help from “pain clinics,” some of which are more than happy to bill an insurer for $10,000 worth of medical care…per individual! Another gray area medical service is massage therapy.

Some of the most brazen fraudsters (who got caught) have been captured by parking lot video cameras, which recorded the staged accidents taking place.

After such accidents, these individuals call a group of friends, who show up at the scene and claim to have been injured. Let’s say six people claim to have soft tissue injuries. That’s a $60,000 payout by the insurer.

Proposed Changes to the Law

The Gear Up Florida coalition is not seeking to end PIP coverage in Florida, but rather wants the following steps taken to curb the rampant fraud.

1. Give Insurers More Time – Insurers have a specific amount of time to process and pay out these types of insurance claims. State laws seek to make sure insurers aren’t dragging their feet for those who are really injured. It is thought that insurers can limit the fraud by taking more time to investigate the claims more thoroughly.

2. Limiting Attorney Fees – Attorneys can rake in big bucks by getting involved in the claims process. The idea here is if attorneys can’t make as much money dealing with PIP claims, they will be less aggressive in their pursuits of higher payouts.

3. Pain Clinic Oversight – Many pain clinics are a godsend to those who really need them to manage legitimate pain. However, there is so much easy money involved here that some pain clinics are engaging in the fraud by continuing to offer “medical” services to those who don’t need them…for a fee, of course. This includes other “alternative” medical treatment facilities.

Ultimately, there are a few bad apples out there that are costing the rest of us millions of extra insurance premium dollars on a yearly basis.

It is imperative that the loopholes get closed here and only those who need legitimate medical services benefit from this type of auto insurance coverage.

Tip: 10 ways to lower your car insurance costs.

(photo: ChazWags)

Farmers Insurance recently “saluted” itself in recognition of “University of Farmers,” their frequently advertised insurance school, which took 1st place in Training magazine’s 11th annual Training Top 125 awards program.

This all but forced us here at TTAI to take a closer look into the University of Farmers and give you the skinny on what it’s all about.

Is This a Joke?

The commercials seem to imply this is some sort of a joke (see the “Meatloaf” commercial or the one about the car/boat/house thing).

But nope, there is actually a physical “University” where people can attend classes. We’re unsure if there’s a Greek system though…

So why would Farmers take this approach? Well, many national “chain” insurers have sunk to the level of turning insurance into a joke for the purposes of their advertising.

Our guess is they’re trying to relate to the younger, more internet-savvy consumers, who have begun buying insurance online rather than visiting the old brick-and-mortar shops seen on every street corner in America.

So, the school is real, but what really goes on there? It certainly isn’t an accredited four-year college.

What is University of Farmers?

The University of Farmers, officially dedicated in 2006, is a 120,000 square-foot training facility in Agoura Hill, California.

There are 20 “state-of-the-art” classrooms within the facility in which they train their insurance claims and management staff, as well as their current and prospective agents on the ins and outs of their respective fields.

The claims training facility appears to take up a good bit of space, including a two-story, full-sized mock home and a mock auto bay that can house up to 20 damaged cars.

Similar to other universities nowadays, Farmers also offers thousands of online classes for their employees to complete while residing in other states…in addition to the work they complete at the facility itself.

Why Does Farmers Have a “University?”

For our purposes, we’ll discuss solely the “agent” training afforded by the “University,” as that seems to be the focus of the advertising.

Anyone in their right mind would want insurance professionals to be knowledgeable. But why have a special school…beyond each state’s requirements?

Well, captive insurers, such as Farmers, State Farm and Allstate will make just about anybody an agent, with authorization to sell their insurance products. In fact, it’s not necessary to have a background in the insurance industry to become an agent with many of these insurers.

Sure, you may have to pass a “personality” test, and maybe even prove that you have over 100 “leads” (see friends and family) to become an agent, but they profess to do the rest.

“Have your own business” is how it’s advertised! They’ll teach you how to sell policies to your friends and neighbors…if you aren’t able to meet the sales goals after that point, Grandma’s new Farmers policy is simply transferred to an agent who can “make the grade,” and you’re back to what you were doing before you convinced your 100 “leads” to purchase coverage from Farmers.

Is University of Farmers Necessary?

Not according to the Department of Insurance in any of the 50 states in our great nation.

You must pass a written exam to become a licensed insurance agent in your state, as well as complete continuing education courses every two years to maintain your “licensed” agent status.

And most independent insurance agents, those who represent multiple companies, cannot “earn” the right to sell products on behalf of insurers without proving years of experience and knowledge in the field of insurance.

The story is a little different with captive insurers though…which may explain the presence of the university.

Read more: Job description of an insurance agent.

There is probably mold in nearly every household in the United States. Don’t think so? Check the grout in your bathtub.

While we live with small amounts of mold every day with no real negative effects, it can certainly destroy a home if it grows rampant. So it must be covered on your homeowner’s insurance policy, right?

Maybe…maybe not. As always, it is recommend that you read your homeowners insurance policy from front to back and ask your agent or insurer to explain everything you don’t understand, which may be half of it.

It’s better to spend two hours doing this once per year than suffering a financial loss that’s not covered by your policy.

There is very likely some mold coverage contained in your policy. But we can almost guarantee you there are restrictions on when mold is covered and to what dollar limit.

When Mold Is Covered

Most homeowner’s policies include some coverage for mold testing and remediation. But we’re not talking about your bathtub here…or the mold that grows underneath the water spigot in the backyard.

Specifically, mold coverage is only triggered on your policy when the mold is a DIRECT result of a “covered” water loss. Picture your water heater busting a pipe and spilling water onto the floor and walls in a closet.

The water damage described above is an example of “sudden and accidental discharge of water from a plumbing, heating or cooling system,” ABOVE the foundation of your home.
(Does flood insurance cover my basement against seepage?)

This is covered on most policies that are worth the paper they’re printed on. For the record, very basic home insurance policies may not contain this coverage. Again, ask your agent or read your policy for details.

When Mold MAY NOT Be Covered

The keyword in the section above is a “covered” water loss. For example, if you don’t have water seepage or foundation water damage coverage included on your policy (neither are automatically included in most cases), and you develop a mold from one of these “uncovered” water losses, you’re likely out of luck.

Also, if mold simply runs rampant in your home due to humidity, poor air circulation or bad housekeeping, you’re likely going to have to cover the cost of testing and remediation without the help of your insurance company.

Remember that insurance is generally designed to protect against accidents. While poor home maintenance is not a crime, insurers certainly aren’t going to pony up money for those of us who don’t keep our dwelling clean and tidy.

How Much Coverage Can I Expect?

You might see coverage limits for mold testing and remediation in the $1,000-$10,000 range on your current policy. And some policies simply state that they will pay the “reasonable” expense to test and remediate mold damage for a “covered” loss.

You might prefer the latter, as there is no set limit and you may have more leeway on the cost to repair the damage. An insurer who denied a claim would have a hard time explaining that their idea of “reasonable” was less than the cost to repair your damage if there were any serious disputes at claim time.

In some states, insurers are forced to offer mold coverage in limits that are derived from a percentage of the value of your home. For example, if your home is covered at $200,000, you can purchase 25%, or $50,000, worth of this valuable coverage. Limits of 50% and 100% may also be available.

Expect to pay through the nose for these options. They are typically very expensive and can add hundreds, or even thousands, of dollars in additional insurance premium to your current policy.

Additionally, you may have the option to purchase a stand-alone mold policy for your home. This is separate from your homeowner’s policy all together.

You may see premiums from a few hundred dollars up to as much as $25,000 for this policy, depending on where you live in the U.S. If your home is in a hot, steamy climate, you’ll be on the higher end of the scale. Of course, the size and value of your home also comes into play here.

Did we mention to ask your agent and read your policy yet? That’s really the best way to ensure you are comfortable with the coverage and limits of liability.

If your current insurer doesn’t provide enough or any mold coverage as part of their policy, grab a few insurance quotes online and/or contact a local independent insurance agent to shop around.

(photo: seishin17)

You may have read our recent post about State Farm non-renewing 10,000 home insurance policies in Florida. That’ll probably ensure they are making enough money, right?

WRONG. State Farm plans to increase the cost of homeowners insurance policies by 5% in Alabama to increase future profits, according to National Underwriter.

The whole “Like a Good Neighbor” thing is losing its luster as they continue to raise rates and fight allegations of “gouging” their insured and illegally denying insurance claim payments in many states.

For the record, State Farm is the largest writer of personal-property insurance in the state.

Why the Increase?

We’re positive it’s not being done so they can continue to afford their $500,000,000+ yearly advertising budget…surely that money is spent out of necessity to “help” their current clients.

(Biggest insurance budgets.)

Perhaps not. State Farm Spokesman David Majors says the increases are necessary for “anticipated future needs.”

Translation? “We MAY need more of Alabama’s money in the future…we’re not certain, but taking more of your money is a risk “we” are willing to take.

Is State Farm Planning Any Other Changes?

We’re glad you asked. The answer is, yes! State Farm also plans to make some changes to the discount model in the state.

As you may have guessed, the change will also result in higher insurance premiums for Alabama customers.

We’ll spare you the mind-numbing explanation of how homeowners insurance rates are determined and give you “the truth.”

Previously, State Farm was offering discounts on policies if a particular homeowner fortified their home based on standards from the Insurance Institute for Business and Home Safety.

For example, if you “fortified” your home according to these standards, you would receive a 5% discount on your entire policy premium.

So if your premium was $700 for 12 months of coverage, the 5% discount would push your premium to $665.00 for the year. Basically, a 5% discount on the ENTIRE PREMIUM.

The new plan will only offer the discount for the portion of the premium that directly applies to the “hurricane damage” your home may suffer.

Translation? Your WHOLE policy discount of 5% is now reduced to the specific coverage for a hurricane. Say what?

Instead of your entire premium reduction in the example above ($35 dollars), you will only get a 5% discount on the $100 worth of “hurricane coverage” on your policy…or a $5 discount. Fire damage? No discount. Water damage? No discount.

So your $700.00 policy is $695.00 instead of $665.00. Advantage State Farm!

When Will the Changes Take Effect?

The increased premium will be effective for new business policies issued on November 15, 2011 and for any renewal on January 1, 2011.

Basically, if you’re already a customer, and your policy renews between November 15, 2011 and December 31, 2011, you won’t feel the bite until your 2012 renewal…or one year later.

If you bought your original policy after January 1, 2011, prepare to write a bigger check…

Or you can start shopping around and look for the same coverage at a lower price.  Consider an independent insurance agent who can shop your rate with multiple carriers all at once to save time.

Coming on the heels of a 3.9% rate increase in March of 2011, Farmers Insurance plans to increase homeowners insurance rates another 10% in the Lone Star State.

This latest rate increase will affect roughly 350,000 insured in the state of Texas, and will take effect March 16, per the Dallas Morning News. Ouch!

Why Farmers, Why?

The current economy is a strain on everyone these days. Not only consumers, but insurers as well.

Also, they have to pay for those snazzy University of Farmers commercials you see on television and hear on the radio. Those aren’t cheap you know…what with all those A-list actors involved.

(How much do insurers spend on advertising?)

The exact details for the increase are not made available to the general public, but Jim Swope, the Vice President and Executive Director for Farmers in North Texas, stated that the higher rates are needed to address more expensive insurance claims in Texas.

Feel better? Nah, we didn’t think so.

Are You at Risk of an Increase?

There are two “types” of homeowner’s policies that will bear the brunt of this increase.

You will want to carefully review your home insurance renewal if you have purchased a “Texas Family Home” or “Next Generation” policy from Farmers Insurance.

Not sure which you have? Call your Farmers agent and ask. They will be able to tell you which you have. After all, they went to Farmers University (not to be confused with a real university).

In short, it looks like the Next Generation policy may not have been priced correctly when it was debuted last year. A 10% increase may mean one of two things:

1. Farmers made a mistake and underpriced the product when they compared it to their competition’s policies – OR -

2. Farmers underpriced it on purpose in order to gain market share and take advantage of those who simply don’t review and shop their insurance costs each year (which is a large portion of the public).

That said, Farmers is not alone here. Insurance companies adjust their rates all the time.

Almost every insurer makes at least one adjustment each year, and just like the cost of gas and bread…insurance prices have risen over the decades.

What Can You Do If You Are Affected?

There are really only a couple of options available to you when your insurance company increases your rate this much. Some options are good, and others not so much.

Here are some ideas if you think a 10% rate increase is just too much to take on:

1. Get insurance quotes online and/or contact a local independent insurance agent who represents several insurance companies.

Independent agents are less likely to feed you a line about the cost of someone else’s claim. They will simply shop your insurance premium and coverage with multiple insurance companies and let the best one win.

2. Contact you current Farmers agent and ask if there is any way to bring the premium down WITHOUT increasing your insurance deductible or reducing your coverage.

We’re talking discounts here…not reducing coverage and increasing your risk to save a buck or two.

Read more: Top homeowners insurance companies in Texas.

Like a good neighbor…State Farm may borrow your hedge trimmer and not return it!

But worse yet, the company plans to send 10,000 Florida homeowners in search of new coverage next year, according to National Underwriter.

Yep, the second largest personal property insurer in the Sunshine State will non-renew 10,000 home insurance policies. Ouch.

Why Would State Farm Do This?

Well, contrary to what you may see or hear in their formidable television, radio and internet marketing campaigns, State Farm’s main goal, as a multi-billion dollar insurance company, is actually to avoid paying insurance claims brought on by backing your car up a pole or having your home destroyed by a robot alien (both examples in their recent television commercials).

By doing so, they increase shareholder returns…you know, for people who own their stock…not necessarily those who purchase their insurance.

(Which insurers spend the most on advertising?)

It may sound cruel, but insurance is a business. And no business is in “the business” of losing money. State Farm, like many insurers in hurricane-ridden Florida, love to sell insurance policies when they can, then disappear when they are not making as much money. It’s common practice.

The only difference between State Farm and other, typically smaller insurance companies, is that they will simply buy more advertising time and brainwash the general public into thinking they only exist to pay claims – and that other insurers may not pay claims as easily and generously.

What Can You Do If You’re Non-Renewed?

Exactly what you should have done before you purchased a State Farm homeowners insurance policy. Get insurance quotes online and/or shop your insurance premium with an independent agent.

Independent insurance agents represent several insurance companies and can usually find you a lower cost insurance policy than the captive guys, who can only supply a single quote.

So, when you State Farm agent doesn’t return you phone calls after you’ve been non-renewed, you can rest assured your independent agent will have more options for you.

Remember, insurance isn’t about advertising. It’s about coverage and premium.

Don’t be fooled by a television commercial. Independent insurance agents can usually find you MORE COMPREHENSIVE insurance coverage for less money.

After all, they don’t have to pay for all those silly commercials, which will certainly increase your premium.

Read more: Top 10 homeowners insurance companies.

Wondering where it’s safest to operate your vehicle?

Well, a new survey revealed that Fort Collins, Colorado was the safest spot in the country for the second year running, according to CarInsuranceRates.com, an insurance quote provider.

The company noted that the average driver there has a sizable 14 years between accidents and a 30 percent lower chance of getting into an accident than the national average.

Who else ranked in the top five? Drivers in Boise, Idaho, Lincoln, Nebraska, Chandler, Arizona, and Huntsville, Alabama.

If you live in one of those areas, give yourself a pat on the back and continue to drive cautiously.

But if you’re a driver in one of the following cities, be careful:

Those behind the wheel in Washington, D.C., Baltimore, Maryland, Glendale, California, Newark, New Jersey, and Providence, Rhode Island exhibited the highest accident risk.

As a result, auto insurance premiums in these areas should be higher to compensate for the expected higher number of insurance claims.

So does it add up?

Let’s look at a recent survey from Insure.com found that car insurance was most expensive in the state of Michigan.

Michigan wasn’t cited for having dangerous drivers, but it is the only state that guarantees unlimited personal injury protection.

For this reason, car insurance rates there are the highest in the nation. So it’s not just about the driver.

However, Washington D.C., Maryland, and California all made the top 10 in terms of most expensive states for car insurance. So they make sense.

New York and New Jersey were around the national average, and rates in Colorado, Idaho, Nebraska, Arizona, and Alabama were all below the average premium paid nationally.

(Do insurance premiums increase every year?)

All in all, the numbers from both surveys add up, but they still reveal how much more goes into determining car insurance rates.

It’s not just the drivers in your state, but also the state laws pertaining to insurance, the amount of traffic, the number of companies competing for business, and so on.

In other words, don’t expect your car insurance rate to be rock-bottom simply because you live in a so-called “safer area” than others.

And understand that individual driving characteristics are also highly important, such as what’s found on your motor vehicle record and CLUE report.

Your credit score (insurance score) can also sway your insurance premium tremendously, so be sure to keep your financials in top shape if you want to get the lowest price on your auto insurance.

Tip: 10 ways to lower your car insurance premium.

Insurance Q&A: “What is an insurance binder?”

Insurance is a business of promises and paperwork. Usually, in that order. The insured promises to pay an insurance premium and the insurer promises to pay for covered insurance claims during the policy period.

Each party’s promises are secured by an insurance policy, which is ultimately a binding contract (the paperwork).

But we don’t ever simply walk into an insurance agency, answer some questions and then walk straight out 30 minutes to an hour later with a policy in our hands and an absolute guarantee of coverage for the entire policy period.

Reality Check – Insurance Policy Processing

You may have a guarantee of coverage “for the time being.” You see, insurance companies can issue a policy, and then go back and check the “facts” we provided.

Most states allow a 60-day window for an insurer to underwrite a policy and verify they are interested in maintaining coverage.

Tip: Don’t panic here. As long as you didn’t misrepresent yourself during the application process, you’re likely OK. The insurers must give you a specified period of time to find new coverage if they decide not to continue your policy. They can’t just cancel your policy at will with no notice.

For this reason, insurance policies are typically delivered to us as many as 1-4 weeks after they became effective. This is the time frame in which they “underwrite” the policy.

That lapse in time between purchasing the policy and when it’s actually delivered is where the insurance binder comes into play.

Enter the Insurance Binder

An insurance binder is a temporary oral or written contract that provides evidence a particular policy is active at any given time.

It can be a prepared document that demonstrates the basics of coverage, or even a verbal, “You’re covered” from an insurance agent with the authority to do so (this is very rare). Not surprisingly, this is referred to as binding authority.

Temporary auto liability ID cards are a great example of a binder. Your auto insurance agent may have issued you ID cards right off of his or her printer and instructed you to put them in the glove box until the permanent cards arrive in the mail with your policy (instant proof of insurance).

The agent and insurer will “take your word for it” for the time being. They are willing to risk the chance that you have forgotten about, or even lied about, your health or driving history.

They’re not fools though, and will likely review your application using various reports to ensure your answers are accurate.

What Information is Included?

A binder needs to have a few key pieces of information in order to be valid. Here are the basics:

Name of the insured – you or your company must be listed
Limits of coverage – how much coverage you purchased
Type of insurance – homeowners, auto, health, commercial, etc.
What is being covered – exactly which car (by VIN) or house (by property address)
Name of the insurer – no explanation needed
Effective date – when does the policy start and end
Additional interests – this may be your loss payee or lien holder

Again, just the bare bones basics here. You will certainly need to read your entire policy when you receive it to make sure all of the coverage details are accurate. A binder (or a policy for that matter) is not a note from the insurer promising to pay any possible claims that arise.

How Long is a Binder Good For?

There is no set number for the length of time you can get by on a binder. Many of them simply state they are “temporary,” until the policy is delivered and accepted.

It is common to hear a 10-day binder limit for many types of policies however.

That seems to be an industry-wide acceptable length of time to review a new business application and decide whether or not to continue coverage.