However, as is customary between the insurer and the insured, an oral binder may be effective - even if it does not contain all of the specifics set forth in the Insurance Code.Ī written binder, however, is preferable when dealing with third parties because Insurance Code Section 382.5(b) provides that if any party to a contract refuses, without reasonable cause, to accept the written binder as proof of insurance, he or she will be deemed to have breached the contract and the insured will be entitled to appropriate injunctive relief, damages for the breach and reasonable attorney’s fees and costs. The primary purpose of this requirement appears to be to establish that such a writing will constitute satisfactory proof of insurance for an insured’s dealings with third parties.
