BINDING RECEIPT Meaning and
Definition
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A binding receipt refers to a written document issued by an insurance company to an individual as a temporary proof of insurance coverage. It serves as confirmation that an insurance policy is in effect until the actual policy documents are prepared and delivered to the insured.
During the initial stages of securing insurance coverage, the insurance company may issue a binding receipt to signify that the application has been accepted, and coverage has been bound. This receipt is typically given before the formal policy documents are generated. It assures the insured that they are protected against potential risks or perils mentioned in the policy during the interim period between application and policy issuance.
The binding receipt outlines important information regarding the insurance, including the coverage start date, the duration of the temporary coverage, and any special terms or conditions that apply during this period. It is crucial for the insured to thoroughly review the binding receipt and ensure that it accurately reflects their intended coverage prior to the issuance of the final policy.
It is important to note that a binding receipt is not the final insurance contract itself but a temporary agreement between the insurance company and the insured. Once the policy documents are finalized and provided to the insured, they will supersede the binding receipt.
Etymology of BINDING RECEIPT
The etymology of the word "binding receipt" can be understood by analyzing the origins of each component of the phrase.
1. Binding: The word "binding" derives from the Old English word "bindan", meaning to tie or fasten. It entered the English language around the 14th century and has since been associated with the act of joining or securing things together.
2. Receipt: The word "receipt" has its roots in the Latin word "recipere", which means to receive or take. It found its way into Middle English through Old North French during the 14th century and has been used to refer to a written acknowledgment of payment or goods received.
When these two words are combined, "binding receipt" suggests an acknowledgement or written document that affirms the contractual agreement between parties and has the legal power to bind them.
