Georgia Adjuster Practice Test

How long can binders be made for, and what is required for an extension?

1. 30 days with verbal approval

2. 90 days with written approval

3. 60 days with no approval needed

4. 120 days with verbal approval

The correct answer is: 90 days with written approval

In insurance practices, binders are temporary contracts that provide coverage until a formal policy is issued. The correct choice indicates that binders can be extended for a duration of 90 days, but this extension requires written approval. This requirement for written approval is significant because it adds a layer of formality and clarity to the agreement between the insurer and the insured. It ensures that both parties are in alignment about the terms of the coverage and the conditions governing the extension. Written consent plays a crucial role in maintaining legal integrity and can serve as a reference point in case of any disputes or claims arising during the binder period. In contrast, the other options do not accurately reflect standard industry practices regarding binders and their extensions, either by suggesting shorter durations without necessary approvals or by incorrectly associating verbal agreement with longer periods. Hence, the choice that states the extension is valid for 90 days with written approval is consistent with the established procedures in the insurance field.