If you call for a home, mobile home, or flood policy or to add comprehensive and/or collision insurance to your auto policy and are told no because the company is under binding restrictions, it may confuse or even irritate you.
What in the world are binding restrictions and why do insurance companies implement them?
When you go into your agent’s office to purchase a policy and if all underwriting requirements are met at the time of sale, a Binder is issued along with Evidence of Insurance.
This Binder means the property is covered at that time and until an actual policy is issued – at which time the policy is in force – therefore the binder is no longer necessary.
A ‘binding restriction’ is where an insurance company refuses to write new policies due to impending threat from a named storm, thereby reducing the possibility of immediate and large claims.
You’ll find these are more often associated with writing home or mobile home insurance or even a renters policy, but companies insuring automobiles, motorcycles and recreational vehicles have also implemented binding restrictions on new policies that require Comprehensive and/or Collision coverage.
When the company issues a binding restriction, they may not allow changes to coverage or reinstate a lapsed policy either, so now that hurricane season is upon us and we are inundated with tropical storms this time of year, don’t wait!
Insure your property – properly – today.
Until next time take care and remember…putting off until tomorrow what needs to be done today could cost you plenty if insurance companies are under binding restriction.
Tommy Curtis and Staff
Is an insurance agent with integrity and your best interest in mind. Call to speak directly to him.
Address: 509 7th Street
Lake Charles, LA 70601
Office Hours: M-F 9a - 5p (CST)