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.