What is the term for a temporary written or oral agreement to provide insurance coverage until a formal written policy is issued?

• A. Direct-action statute
• B. Contestable period
• C. Contract of adhesion
• D. Binder

Answer: (D)

Binder is the term for a temporary written or oral agreement that provides insurance coverage until a formal written policy is issued. It creates immediate protection and is backed by the insurer’s binding authority, outlining the basic terms like effective date, limits, and conditions, often with premium paid or agreed. It stays in effect until the policy is issued, the binder expires, or coverage is canceled. The other concepts don’t describe this interim mechanism: a direct-action statute deals with suing the insurer, not coverage during the interim; a contestable period governs post-issue misrepresentation challenges; and a contract of adhesion refers to standard-form contracts drafted by the insurer, not a temporary coverage arrangement.