If a loss occurs before a policy is issued but coverage is bound through a broker, what happens?

When coverage is bound through a broker, it establishes a temporary or interim agreement between the insurer and the insured, even if the formal policy has not yet been issued. This means that the insurer agrees to provide coverage from that point onward, subject to the terms that would be included in the final policy.

If a loss occurs between the binding of coverage and the issuance of the actual policy, the insurer is generally obligated to cover the loss as if the policy were already in effect. This is based on the principle of fairness and the expectation that the insured is in good faith believing they are covered. It underscores the importance of binding authority that brokers possess, allowing them to create a contract of insurance that is enforceable prior to the formal issuance of a policy.

Therefore, the correct conclusion is that the loss is covered as if the actual policy had been issued. This reflects the binding nature of the agreement made through the broker.