What must happen if an oral binder is issued?

When an oral binder is issued, it is important for it to be documented in writing as soon as possible. An oral binder serves as a temporary insurance contract that provides immediate coverage until the formal policy is issued. However, to ensure that there is clarity and a formal record of the coverage agreed upon, it is necessary to document the terms of the binder in writing. This written documentation helps to prevent misunderstandings and disputes regarding the coverage offered, as well as outlining the conditions, limits, and effective date of the coverage.

Establishing a written record is crucial for both the insurer and the insured, as it provides legal backing to the temporary agreement and serves as proof of the coverage details agreed upon orally. Without written documentation, there could be ambiguity in the terms discussed verbally, which could lead to complications if a claim arises or if the policy needs to be enforced.