What is typically true about a binder in the insurance context?

In the insurance context, a binder is generally understood to be a temporary agreement that provides coverage until a formal policy is issued. The statement about the duration of a binder being typically up to 90 days is correct. This time frame is common because it allows both the insured and the insurer some flexibility in finalizing the terms of the policy. During this period, the insurer can conduct any necessary underwriting, risk assessment, or premium determination while still providing the insured with coverage.

The concept of a binder is essential in situations where immediate coverage is needed, yet the complete underwriting process has not been completed. This additional time is particularly important in cases where immediate risk coverage is necessary, such as in real estate transactions or when a vehicle is purchased.

Therefore, the assertion regarding the duration of a binder being a maximum of 90 days aligns well with standard practices in the insurance industry, making it a central characteristic of how binders function.