Monday, May 08, 2006

ACORD Forms : How to Complete an Insurance Binder 75

Insurance Binder 75-S

This guide provides basic instructions to complete the ACORD Binder forms. The descriptions explain the information needed to properly issue a binder.

The ACORD Insurance Binder addresses both Personal Lines and Commercial Lines risks, although most ACORD Personal Lines applications contain a "built-in" binder. For Commercial Lines, the layout format within the General Liability Section of the ACORD 75 is customized to the ISO Policy Simplification program.

Before issuing any binder, the following important considerations should be reviewed and considered carefully:

A Binder (Cover Note) is a temporary insurance contract which provides coverage and must be underwritten as an insurance policy.
The improper use of binders has become a major cause of producer's Errors and Omissions claims. It is imperative that only authorized people prepare them. Preparation must be complete and accurate.
All binders must conform to the state insurance code for the state in which the subject of insurance is located.
The maximum and/or minimum term of a binder may be governed by state statute and/or company underwriting instructions.
At the end of the binder's specified term, all coverage expires unless a new binder has been issued or the expired binder has been replaced with a policy.
The language in the binder must be precise. Do not use vague or all-encompassing terms which may imply coverages not intended, such as "All Risk." If possible, use the same language and terminology that will appear on the policy.
An agent may only issue binders which comply with the company's
underwriting instructions (per company manual, agency agreement,
correspondence and/or company underwriter). If the authority is not in writing, the agent should obtain written authority. Most agency agreements contain stated "time frames" within which the company must be notified of any risk bound.
Generally, a broker cannot bind insurance. A broker may only exercise the authority extended by the company. It is recommended that individual binders be issued for each company affording coverage.
Most agency agreements dealing with surplus lines and specialty market contracts do not allow the agent or broker to bind coverage. Authorization must be secured prior to binding.
A binder provides coverage for a specified period. In most jurisdictions, a premium must be charged for this period unless the binder is replaced by a policy or endorsement. A deposit should be obtained when issuing a binder. A deposit premium may be required by some companies.
* Most companies prohibit issuing or extending binders where coverage has been refused or cancelled by any carrier.

All Limits should be listed as whole dollar amounts. Enter Limits corresponding to those found on the policy declarations page.


Month/day/year on which the form is completed.

Name and address of the producer or broker issuing this form.

Phone (A/C, No, Ext)
The producer's telephone number.

Identification code assigned to your agency or brokerage firm by the insurance company receiving this form.

If your agency uses a subcode identification system with the company, enter the appropriate code.

Agency Customer ID
Customer's identification number assigned by the agency.

Name of the applicable insurance company. Use the actual name of the company within the group to which this binder is being issued. Do not use group names.

Binder No.
Control number assigned to the binder for referencing purposes. If created by the agent, this number should be sequential and tracked within the Binder Log (ACORD 76). It may also be assigned by the company, in which case it might be the actual policy number. For control purposes, the number should be tracked within the Binder Log.

Effective Date
Date on which the terms and conditions of the binder commenced. This date normally coincides with the effective date of the policy or of an endorsement to the policy.

Effective Time
Time when the binder commenced. Check the appropriate AM or PM box associated with this time.

Expiration Date
Date on which the terms and conditions of the policy will or have expired. Certain state laws limit the terms of a binder, so this date may not coincide with the policy expiration date.

Expiration Time
Check the appropriate time of 12:01 AM or Noon when the binder expires.

This Binder is issued to extend coverage in the above named company per expiring policy #

Check the available box and enter the policy number of the expiring policy. Use this option to extend coverage on a policy where renewal is not yet available.

Name of the insured and mailing address requested or found on the declarations page of the policy. The line within this field is a margin setting used for window envelopes.

Description of Operations/Vehicles/Property
Outline the operations of the insured, vehicle information and usage, and, for property exposures, location information. Examples:
Machine Tool Die Casters
91 Chevy H10 Pick Up Truck - VIN C12345P8991, used for delivery
Location 1 - 123 North Main St, Hartford, Ct

If the location is the same as the mailing address, and this address is properly descriptive, state "same as mailing address," rather than repeat the address.

All limits should be listed as dollar amounts.

Complete this section when binding property coverages.

Causes of Loss
Check the appropriate box to indicate the Cause of Loss for which the property coverage is being bound. For options outside of Basic, Broad, or Special (Spec.), such as Spec. Excluding Theft or Homeowners - HO-3, enter the coverage name in the available space.

Subjects of insurance that are being covered and any necessary location information (e.g., Loc 1 Building Personal Property Dwelling).

Coins %
Any applicable Coinsurance percentage associated with the corresponding subject(s) of insurance.

Any deductible associated with the corresponding subject(s) of insurance.

Corresponding amounts of insurance for the corresponding subject(s) of insurance.

Complete this section when binding general liability coverages.

Commercial General Liability
Check this box for Commercial General Liability (CGL) and the corresponding box to designate the type of policy issued ñ Claims Made or Occur. (Occurrence).

Other General Liability Coverages
Liability coverages not found on the form may be listed in the last three option boxes. The coverage type should be listed next to the available box (e.g., when binding Comprehensive Personal Liability, check the first box and insert "Comprehensive Personal Liability" on the line after the box).

For Commercial Lines policies, enter the classification code(s) and description of the class(es) for which the binder is being issued. Include any form numbers. For Personal Lines enter the policy form numbers.

Retro Date For Claims Made
If the Claims Made option box is checked, and there is a retroactive date, enter the date. If there is no retroactive date, enter "none."

Complete the appropriate limits to match the policy declarations page. All limits should be listed as whole dollar amounts.


Products Comp/Op Agg . . . . . . . . . . Products Completed Operations Aggregate
Personal & Adv. Injury. . . . . . . . . . . . .Personal and Advertising Injury
Med. Exp. . . . . . . . . . . . . . . . . . . . . . . . . Medical Expense

Complete this section when binding automobile liability coverages.

Indicate which classes of vehicles are being bound by checking the appropriate boxes. Available options are: Any Auto, All Owned Autos, Scheduled Autos, Hired Autos and Non-Owned Autos. If coverage is for scheduled autos only, attach a list of the vehicles with their appropriate coverages. If other automobile coverages are desired, use the optional box and write the coverage name next to the box.

List any policy form numbers in this section.

Complete the appropriate limits to match the policy declarations page. All limits should be listed as whole dollar amounts. Use the optional limit line to list any coverage not specifically listed, such as Additional Personal Injury Protection (APIP).


Complete this section when binding automobile physical damage coverages. If physical damage coverage is being bound, use the appropriate box to indicate Collision or Other than Collision coverage. List any deductibles in the available space.

All Vehicles/Scheduled Vehicles
Indicate if collision coverage applies to all or only scheduled vehicles.

Valuation Type
Check the appropriate box to indicate what basis is to be used for determining the vehicle's value. Options are: Actual Cash Value, Stated Amount and Other. For "Other," list the valuation type in the space provided.

List the combined sum of the vehicle's physical damage valuation.


Complete this section only if you are binding garage liability. Use the available lines or the "Any Auto" option to indicate coverage specifics.

Coverage Forms
List any applicable coverage form numbers.

Complete the limits found on the Garage declarations page.


Complete this section when binding some type of excess liability policy. For Umbrella policies, check the appropriate box. If the Other Than Umbrella box is checked, an additional reference should be made in the Coverage/Forms section stating the kind of policy and to which coverages the policy applies (e.g., Excess - Auto section).

Retro Date For Claims Made
If this is a Claims Made policy and there is a retroactive date, enter the date. If there is no retroactive date, enter "none."

Complete the limits in accordance with the policy declarations page.

Workers Compensation and Employer's Liability
Complete this section when binding workers compensation and/or employer's liability policies. If the policy being bound is written using Statutory Limits, check the appropriate box. If Employers Liability is included, show the limits for "Each Accident," "Disease-Each Employee," and "Disease-Policy Limit."

Special Conditions/Other Coverages
Provide any additional information pertinent to the bound policies. Include any special endorsements that are not specified in other sections of the binder. The area can also be used to add other coverages, refer to other binders, acknowledge receipt of deposit premium, or show fees, taxes and/or estimated premium.


This section tracks any additional interest to the policy.

Name & Address
Complete name and address of an additional interest if any have been indicated. The line within this section is a margin setting used for window envelopes.

Interest Type
Check the additional interest's type in the appropriate box. Options are:
Loss Payee
Additional Insured

Loan #
List any loan number, account number or other controlling number that the additional interest may have assigned the insured.


Binders must be signed by authorized representatives of the issuing company.

Click here to view my web site ACORD Forms.


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