What is the term for temporary coverage before a new policy is issued?

The term for temporary coverage before a new policy is issued is known as a binder. A binder is essentially an agreement that provides coverage for a specified period of time while the details of the actual insurance policy are being finalized. It is especially useful in situations where immediate coverage is necessary, such as when a buyer is purchasing a property and wishes to ensure they are protected from potential losses before their formal policy takes effect.

Binders typically include key terms of coverage and can be considered as a short-term measure that ensures that the insured has some level of protection in place while all the administrative aspects of the policy are being completed. This concept is vital in property insurance, as it allows for a smoother transition and reassures clients that they are covered during the interim period, which can be critical in real estate transactions where any lapse in coverage could pose significant risks.