Conditional Binding Receipt
Definition of 'Conditional Binding Receipt'
A receipt involved in life, health and certain property insurance contracts; if the insured is deemed to be covered by the insurer, the coverage begins on the date the insured receives the conditional binding receipt. Typically, a premium payment must be received by the insurer along with a completed acceptable application in order for the insured to obtain the receipt.
This may also be called a "conditional receipt" or a "binding receipt" depending on the type of insurance.
Investopedia explains 'Conditional Binding Receipt'
As long as the insured is going to receive the policy anyway, the insurer is obliged to cover a claim should one occur between the time the application is received and the time the policy is officially in place.
If however, the insured is denied coverage as the typical underwriting process progresses, the insurer could nullify the conditional binding receipt, even if a premium was collected.