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Another difference between a binder and a certificate is that binders expire. An inception date and expiration date are listed on the face of the form. Typically, a binder lasts for thirty days and can be reissued for another thirty by most insurance companies if they are taking a long time to underwrite and issue a policy. A certificate doesn’t have an expiration date. It’s good for as long as the insured’s policy lasts and is required until the job or requirement time of the certificate holder is fulfilled.
For example, if you are a contractor and won a bid to build something, and your contract requires the project to be completed within three months, your liability insurance will cover you until completion. The certificate holder won’t care if you keep paying for your insurance after the job is done because they were guaranteed coverage through the duration; now it’s over. What you do with your liability policy is up to you. The same goes for an SR22 certificate. At the end of three years, the Oregon DMV will be satisfied that you have learned your lesson and won’t drive uninsured. But if you do, they will simply require another three years of proof that you are covered for liability insurance.
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What is the difference between a binder and a certificate?
A binder is a temporary proof of insurance issued at the beginning of an insurance contract to satisfy a lender’s needs. It usually lasts about a month, giving enough time to the insurer to underwrite the risk and issue a policy. The lender then gets a copy of the contract with them listed as the lienholder. The contract’s clauses spell out the protection of the physical damage of the object they own until the loan is satisfied.
A certificate is also a form of proof that insurance exists but is not intended for a lender. Certificates deal more with the liability aspect of the contract, not the physical damage coverage of property. Any other party needing proof that the insured is covered for their actions that may lead to physical harm to persons or property is guaranteed coverage by a certificate issued by the insurer. So, if you are a contractor and bidding on a job, the entity requesting the proposal may also want themselves named in a certificate with proof of your limits of liability spelled out in the form’s contents. An SR22 is a certificate required by the State of Oregon that guarantees you will be covered against injury to others and damage to property while driving on its streets and highways. All these parties requiring a certificate don’t care what happens to your property. They want to protect their property and the lives of those who dwell or work on their premises.
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Technology allows us to send a binder to an auto lender or dealer via fax or email. You no longer have to stop by an office for a printed binder to hand-deliver to the dealer or loan officer. Call us from the dealership or bank when securing a loan for your new automobile with the email address and vehicle identification number, and we’ll be happy to email them the binder. Happy driving!
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Often, a car lender or dealer will require proof that your car is insured before funding the loan or allowing you to drive the vehicle away from the lot. The practice of securing the vehicle’s value started the first time a bank lent money to buy one. Getting a borrower to continue making monthly payments after a car is totaled is near impossible. The insurance company would take the place of a borrower and pay back the lender. The temporary proof we send to the lender obligating the insurance company to pay is called a binder. A binder acts as a stand-in until the risk is adequately underwritten and a policy is issued.
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Adding an automobile to a policy often means an additional driver exists. Please give us the name, date of birth, and driver’s license number of a new driver in your household. If you fail to list them and they crash the car, they may not be covered. The policyholder is responsible for reporting all drivers and members of the household who are of driving age. If disabled or unlicensed, the company will list them as a household member only and not charge extra for them. Sometimes, adding a driver to the policy brings the price down, triggering a risk-averaging event. We can help assess the cost if you have a junior member of the family approaching driving age. Encourage the child to wait until eighteen to get their license. The cost to insure a teenager can be as high as $300 extra a month. Failing to disclose them could cost you hundreds of thousands.