If a loss occurs before an actual insurance policy is issued, what happens to the coverage that was bound through a broker?

When a loss occurs before an actual insurance policy is issued but coverage has been bound through a broker, the appropriate response is that the loss is covered as if the policy had been issued. This means that once coverage is bound, the insurer is obligated to honor that binding agreement, even if the formal policy documentation has not yet been completed. The binding of coverage is an indication that the insurer has accepted the risk, and any loss occurring during that period typically falls under the terms that would have been present in the as-yet unissued policy.

This principle is essential in insurance, as it protects the insured from unforeseen events that could happen during the interim between binding and the issuance of the policy, ensuring that coverage is continuous and reliable. The binding process establishes a strong expectation that coverage exists from the moment the binding agreement is made, establishing legal implications that require the insurer to respond to valid claims between binding and policy issuance.