The Sunday Night Binder
A general contractor needs a certificate of insurance before a Monday morning job-site walkthrough. On Sunday evening the retail producer emails the wholesaler, who replies: "We can probably get this bound - send it in." The producer issues a binder effective 12:01 a.m. Monday at a $2 million occurrence limit, emails the certificate to the general contractor, and collects the first premium. On Tuesday an employee of the insured is injured on the job. On Wednesday the surplus lines carrier declines the risk after inspecting the loss runs and roof. On Thursday - after the loss - the producer obtains the insured's signed surplus lines disclosure acknowledgement. The binder itself says "subject to carrier underwriting approval" in small type on page two.
1. Is there a contract of insurance for the Tuesday loss? Identify the elements and the facts that decide the outcome.
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There may be no carrier coverage - and the deciding facts are in the binder language and the wholesaler's authority.
- A binder is a temporary contract of insurance: offer (the application/request with a specified limit and effective date), acceptance (issuance of the binder), and consideration (premium collected). It is enforceable for the period it covers even though no policy has been issued.
- But a binder only obligates an insurer that has authorized it. "Subject to carrier underwriting approval" makes the carrier's acceptance a condition precedent; if the carrier never approved, no coverage attaches, and the producer's binder was an unauthorized promise.
- The wholesaler's "we can probably get this bound" is not a grant of binding authority - it is at most an expression of likelihood. If the wholesaler or producer held written binding authority (and was within its limits and class restrictions), the analysis flips and coverage exists for Monday–Tuesday.
- Evidence that matters: the binder document and its conditions, the producer's appointment/agency agreement, the wholesaler's written authority, the time-stamped emails, and the premium receipt.
Bottom line: with the "subject to" condition and no evidence of authority, the carrier likely owes nothing; the producer faces an E&O exposure for representing coverage as bound. If authority existed and the condition was not effectively imposed, the carrier owes the loss.
2. The insured signed the surplus lines disclosure acknowledgement on Thursday, after the loss. Does that document create, preserve, or destroy coverage?
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None of the three.
- The surplus lines disclosure acknowledgement exists to prove the insured was told the carrier is not authorized in Florida, that the policy is not covered by the Florida Insurance Guaranty Association, and that rates and forms are not filed with the state (s. 626.922, F.S.). It is a regulatory and evidentiary document, not a condition of coverage.
- Signing it after the loss does not retroactively create coverage the carrier never bound, and it does not destroy coverage that already existed. Coverage is determined by the binder, the policy, and the authority of the person who bound it.
- However, obtaining the acknowledgement after placement is itself a compliance defect: the disclosure is meant to be delivered at or before placement so the insured can make an informed decision. Expect an examination finding and possible disciplinary exposure, independent of the coverage question.
- Practical point for the file: a signature dated after a loss invites the argument that the agency knowingly papered over a coverage gap. Preserve the actual email trail and do not backdate anything.