Final answer:
A binder will provide temporary insurance coverage until the policy is formally accepted, offering immediate protection and assurance to the policyholder while the formal policy is in process.
Step-by-step explanation:
A binder will provide temporary insurance coverage until the policy is formally accepted. This binder serves as a temporary agreement that provides proof of coverage to the insured while the formal policy is being processed. Insurance companies issue binders to provide immediate insurance coverage and to assure the policyholder that they have some form of protection. Once the policy is fully underwritten and a formal policy is issued, the binder is replaced by the actual insurance policy.