Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager Chris Harrigan

UPDATED: Oct 13, 2020

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Here's what you need to know...

  • A car insurance binder gives you minor temporary insurance coverage when you need it as you transition to another car or insurance company
  • Temporary insurance is meant to last from 1-28 days on average
  • While you are on an insurance binder, you should use this time to find a more permanent insurance
  • Find out the facts about a company before committing to their policies

A car insurance binder is the same as gap insurance, which is insurance that is issued to temporarily cover you while you look for a more permanent solution.

Enter your zip code to compare rates for gap insurance or other types of coverage in your area!

When do you need gap insurance?


Gap insurance is insurance that covers you for 1-28 days and is not meant to be permanent insurance.

This type of insurance can be handy when you are between insurance policies, which could happen for a variety of reasons, including:

  • When you had your policy canceled for non-payment of premiums
  • When you only need a temporary insurance while you are driving a friend’s car
  • When you need additional insurance to cover what your standard policy does not cover
  • When you lease a car and have to find permanent insurance but have not located it yet

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The Terms of Binder Insurance are Not Always Clear

This Insurance Journal article points out some tips to insurance agents that are also helpful to consumers. One of the points they make is that not all of the terms of the contract are outlined in the insurance binder.

Before you sign off on an insurance binder, you may need to ask more questions than you normally would with other types of insurance. You need to know specifically what is covered even when it is only a temporary insurance.

Benefits of Gap or Binder Insurance

The good thing about gap insurance is that it covers a period during which you would otherwise not be covered, providing insurance so that you meet the regulations for your state.

Also, gap insurance can help you fill the gaps of your other insurance when you feel you do not have enough coverage with your standard policy. Check the fine print of your current policy and add gap insurance if it is not sufficient for your present needs.

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How does binder or gap insurance compare to permanent insurance?

The following comparison points illustrate the differences between an insurance binder and permanent insurance. Like temporary insurance, binder insurance is only meant to be a transitional type of insurance, not an ongoing type of coverage.

  • An insurance binder is just meant to allow for temporary insurance for a few days as someone transitions a new car or adds insurance to their policy.
  • An insurance binder only covers the key liability, bodily injury, and property damage amounts in most cases.
  • It is often not known exactly what binder insurance includes.
  • Permanent insurance includes collision and comprehensive coverage.
  • There are several add-ons for permanent insurance which are not available with temporary insurance.
  • Permanent insurance is renewed every six months or annually, while temporary insurance is only meant to be in force for up to 28 days.

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What should I include in my permanent insurance?

When searching for the best permanent insurance, before your insurance binder is due to run out, you should keep a few things in mind to make sure you get the best deal for your money.

  • Do some research on the companies you are considering and check their rating with the Better Business Bureau and other credible sources.
  • Check blogs and forums for information on how companies fare with the general public and check the number of complaints they have.
  • Find out the company’s claim rate and financial status. An insurance company is required to keep a healthy reserve to pay claims, and this should not be something that is taken lightly.
  • Check to see what extra coverages you can get to add to your policy.
  • Make sure the company you choose meets your minimum state requirements.

Don’t Drive Without Insurance

The best bit of advice we can give you is never to drive without coverage. If you do, and you are stopped by an officer at a routine traffic stop, you will be looking at stiff fines of $350 and up on a first offense.

On a second offense, it goes up to around $550 and may even involve having to appear in court to plead your case.

The law takes a very dim view of motorists who are unable to provide proof of insurance documents when asked to. Keep your proof of insurance in your glove compartment at all times so that you will always have it in the event you are stopped.

Insurance Exists to Protect


Just like the law itself, insurance was invented to protect you, the driver, as well as others. It protects you in many ways, including protection from having to pay for your own medical or repair expenses if you are hit by someone who was negligent.

Likewise, it protects you from lawsuits if someone were to attempt to sue you.

If someone does sue you, your insurance will often pay the damages even if the person brings suit against you personally.

Therefore, insurance is also a means to be a personal shield to keep you from having to suffer severe financial loss and distress due to some incident in which you are found at fault.

Likewise, insurance protects others by requiring your insurance to pay for their personal injury or damage if the accident is ruled to be your fault.

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What’s next?

Now that you know the difference between temporary insurance and permanent insurance and the key to finding the best insurance take your knowledge and browse our site to locate the best insurance company for your needs.

Don’t forget to inquire about add-ons and extras. They may cost a bit extra each month but may be worth it in the long-run.

Enter your zip code now to start researching the best coverage options for car insurance today!