An Independent Insurance Agent and policyholder shaking hands.

What Does It Mean to Bind an Insurance Policy?

If you meet with your Independent Insurance Agent to obtain an insurance policy, your agent may mention that your policy has been “bound”. What exactly does that mean? When your agent binds a policy, it means that he or she, as a representative of the insurance company, confirms that coverage is in place.

Your insurance coverage can be bound one of two ways: coverage can be bound through the insurance company issuing the policy or by the verbal or written commitment (called a “binder”) of an authorized representative of the company, such as an agent. A verbal or written binder is generally used to address the time period between the effective date of coverage and when the policy or endorsement is issued by the insurance company.

Agents have authority to bind coverage within certain limits. It is important to note that receiving a quote from your Independent Insurance Agent does not ensure coverage or bind a policy.