A binder on an insurance policy is a temporary agreement issued by an insurance company that provides immediate coverage while the formal policy is being processed. This document serves as proof of insurance and outlines the essential terms, conditions, and coverage limits. Typically, binders are used in situations where coverage is needed urgently, such as when purchasing a car or property, and last for a limited period, usually 30 to 60 days, until the official policy is issued. They ensure that the policyholder is protected against risks from the moment they apply for insurance, offering peace of mind during the interim period.