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Simple English definitions for legal terms
binding receipt
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A quick definition of binding receipt:
Binding Receipt: A binding receipt is a document that confirms an agreement between an insurance company and a policyholder. It is also known as a binder. It serves as temporary insurance until the policy is issued. The binding receipt outlines the terms and conditions of the insurance coverage and is legally binding for both parties.
A more thorough explanation:
A binding receipt is a document that serves as proof of temporary insurance coverage until a formal policy is issued. It is also known as a binder.
For example, if you purchase a new car and need immediate insurance coverage, your insurance agent may issue a binding receipt that provides temporary coverage until your formal policy is issued.
Another example is when a homeowner purchases a new home and needs insurance coverage before the formal policy is issued. The insurance company may issue a binding receipt to provide temporary coverage until the formal policy is ready.
These examples illustrate how a binding receipt can provide temporary insurance coverage until a formal policy is issued.