Provisional Cover / Binder Clause

Purpose

A coverage gap can arise between applying for insurance and concluding the final contract, for example on moving house, buying a vehicle, or starting construction work, where immediate protection is needed. Provisional cover closes this gap by granting protection from an agreed point in time – often on no more than a verbal or telephone confirmation – without all contract details yet being settled.

Effect and limits

For provisional cover it is sufficient that the insured risks and the scope of protection are ascertainable; the insurer’s information duties are correspondingly reduced. Absent express terms, the conditions the insurer usually applies to provisional cover apply, or failing that, the terms of the main contract. Provisional cover ends automatically once the final contract is concluded, or, if open-ended, can be terminated on short notice.

Negotiation and practice

In practice, provisional cover is usually granted on a standardised basis without individual negotiation, for example through a confirmation letter or an insurer’s app feature. Brokers check that the cover note actually covers the risks needed and that any premium for the interim period is clearly set out.

Jurisdictional comparison

Switzerland regulates the provisional cover note in Art. 9 VVG with reduced form requirements and a 14-day notice period for open-ended cover. Germany treats provisional cover in Sections 49 et seq. VVG as its own contract type with special rules on the incorporation of terms. Austria has a comparable rule in Section 1a VersVG, which in particular emphasises the freedom of form of the cover note.