What is a binding receipt according to Glora v. Philamlife?
A binding receipt or slip is ordinarily a document, slip or memorandum given to the insured, which binds the insurance company to pay insurance should a loss occur pending action upon the application and actual issuance of a policy.
The purpose of a binder is to provide temporary insurance pending an inquiry by the insurer as to the character of the risk and to take the place of the policy until the latter can be issued.
The issuance of a binder evidences, a complete, temporary or preliminary contract of insurance effective from that time until the issuance of the formal policy or until rejection of the risk. Under a life policy, it would establish liability upon the insurer if death occurred prior to the issuance of the policy.
A binder receipt would be misnamed if it does NOT bind the insurer. If the insurer issues a binder receipt with terms which will negate, or neutralize the binding result of the receipt, then the insurer would have actually practiced fraud on the applicant for insurance.