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6 minute read Published on Jan 15, 2026 by BrokerLink Communications
Imagine you're at the dealership, moments away from buying your dream car. Or you’ve just had your offer accepted on your first home, and the closing date is coming quickly. Maybe you're about to launch a small business, and your landlord won’t give you the keys to your new studio until you have proof of insurance. In all these scenarios, proof of insurance is required, and an insurance binder comes in handy.
So, what is an insurance binder? You can think of an insurance binder as a short-term document that serves as your proof of insurance coverage before your official policy papers are finalized. It can be used as a strategic tool when you're short on time and need to complete a legal transaction.
In this guide, we'll go over what an insurance binder is in more detail, where you can obtain one, who needs it, and more. Stick around for more information.
An insurance binder is a temporary contract issued by an insurance company or broker that serves as temporary proof of insurance before your actual policy is finalized. This document usually lasts 30 to 60 days, but may vary between insurance providers and the type of coverage you're purchasing. Common insurance policies where this type of temporary coverage may be required include:
When buying a used or new car from a dealership, they typically ask you to get an insurance binder before you're able to drive the vehicle off the lot, as car insurance is legally mandated across all provinces in Canada. The insurance binder you receive will act as a temporary form of proof that you are covered until the car is in your possession and the actual policy is active.
If you are planning on buying a home, you may need a binder to prove that you have sufficient insurance coverage for it, which may be required by your mortgage lender at the time you're closing on your property. Keep in mind that if you purchase home insurance before the home sale closes, it is recommended that you request an insurance binder while you wait for the full policy to come into effect. This way, you will have something to show your mortgage lenders and even the seller.
Landlords of commercial properties may request proof of coverage before signing contracts.
Before signing a lease as a renter, your landlord may also require that you obtain an insurance binder before you are allowed to move in.
Insurance binders are only issued directly by an insurance provider or a licensed insurance broker. The process is pretty straightforward and quick. For example, some insurance companies can make an insurance binder for you immediately, while others may take between 24 and 48 hours, depending on their underwriting process and the complexity of your new insurance policy.
Insurance brokers like BrokerLink can help issue you an insurance binder quickly so you can share it with your dealership, mortgage lender, or landlord as soon as possible.
Generally speaking, anyone who is entering a legal or financial agreement will need an insurance binder, whether it be for a car, home, or business. Here's a closer look at some examples:
New homeowners: If you're someone purchasing their first home in Ottawa, you'll need proof of coverage before your lender finalizes your mortgage agreement. An insurance binder ensures the lender that their asset, which is your home, has adequate coverage.
New drivers or vehicle owners: Someone buying a car in Alberta may be asked to provide proof of coverage when registering their vehicle. Having access to this type of temporary document provides them the credibility they need to be able to register and legally drive their new car.
Entrepreneurs: A new café owner in downtown Toronto may be asked by their commercial property landlord to provide proof of liability coverage before they can take possession of the lease and begin renovating the space.
Contract workers and consultants: Proof of insurance protection may also be requested by individuals or businesses hiring contract workers or consultants in a professional capacity.
In 2023, Canada experienced 15 catastrophic weather events, with over $3.1 billion in insured losses, mostly stemming from water-related damage. Having proper insurance coverage before finalizing your mortgage is essential to your real estate transaction being successful. So, when should homeowners seek an insurance binder?
Realistically, homeowners and first-time buyers should aim to get their insurance binder before their closing date for several reasons:
Delays in your transaction: Lenders won't release mortgage funds unless you have a home insurance binder ready. Waiting until the last minute can delay your transaction and cause unnecessary stress during an already stressful period.
Incomplete coverage: Rushing your insurance binder could mean that your final policy doesn’t fully reflect your actual needs as a homeowner, leading to coverage gaps and other issues later down the line.
Competitive real estate markets: Canada's real estate market, especially in major cities like Toronto and Vancouver, is competitive. If you're unable to provide an insurance binder during your closing process, you may lose out on your dream property.
The following are common mistakes to avoid:
Being unaware of your lender's insurance requirements when buying a new house.
Getting an insurance binder too early, only for it to expire before your closing date.
Within an insurance binder, you'll find the following documents and information:
The name and contact information: First, your insurance binder will include the “named insured,” otherwise known as the person who owns the policy, or the policyholder. This could be one single person or multiple people.
Type of coverage being purchased: This will detail the type of coverage you're buying, whether home, auto, business, rental, or other coverage.
Coverage limits: For example, dwelling coverage up to $1 million or liability coverage up to $2 million.
Deductible amounts: Depending on the type of insurance you're purchasing, deductible amounts may range from $500 to $2000 or more.
Issue and expiry: The date the insurance binder is valid and when the insurance binder expires.
Insurance company: Name and contact information of your insurance company.
Broker information: If you used a broker like BrokerLink, our contact information will also be listed in your binder in case you need to get in touch with us for further information.
Conditions or exclusions: A list of what is and isn't covered by your insurance policy will be included in your insurance binder as well.
To request an insurance binder from your insurer, you'll need to:
Get a quote: Ask for an insurance quote from an insurance company. Don't forget to shop around for coverage to ensure you're getting the best deal available.
Go over your coverage: Confirm the details of the insurance policy and your premiums.
Request insurance binder: Ask for an insurance binder if you are in a time crunch. Most insurance binders are digital and can be shared with others easily.
Requesting an insurance binder from your insurance company is free. However, you may be asked by your provider to pay your insurance policy premium before the binder is issued to you.
An insurance binder and declaration page are virtually the same thing. They contain information about your insurance policy, including the named insured (policyholder), deductibles, coverage types and limits, and more. However, an insurance binder is issued before the formal policy is ready, while a declaration is provided after the full policy is completed.
While an insurance binder is only temporary, it offers numerous benefits to policyholders in the present moment. It gives you the proof and confidence you need to move forward with important life decisions, whether that’s closing on a home, hitting the road in your new car, or opening the doors to your first business.
Whether you need a home, auto, or business insurance binder or have questions about finding your next insurance policy, get in touch with BrokerLink today. With auto insurance premiums increasing by 9.6% year-over-year in 2024, we can help you secure affordable coverage without sacrificing your protection.
