How Long to Keep Business Insurance Policies

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Pending Claims

The one caveat to all of this is whether or not you have a pending or an ongoing claim that is being worked as part of the policy you are thinking of throwing away.

If you have a pending claim, or an existing one, be sure that you have that insurance policy paperwork on-hand, even if it has expired, as you may have to reference it as you are going through the claims process.

Knowing when you can purge any old documentation is very important as a consumer. You do not want to have to keep papers upon papers for years over time.

The quicker that you can get rid of this stuff, the more organized you are going to be.

Only retain your documents for as long as necessary before replacing them with your automatically renewed car insurance policies.

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If Another Driver has a Potential Claim Against You

If you were involved in an accident, another driver could have a claim against you that has not yet been filed.

You will want to retain a copy of your auto insurance policy in this scenario because you need to know exactly what is covered under your auto insurance policy.

One of the reasons that you may be looking to change auto insurance companies is that you are not satisfied with the way that your current auto insurance company is handling your claim.

This may be a tough way to learn the lesson that getting the lowest possible rate on your auto insurance policy should not be the only reason that you choose an insurance company.

Instead, you must also consider the reputation of the auto insurance company and its record for handling claims from their insured.

If you are shopping around for different auto insurance quotes, then make sure you check with the department of insurance for your state.

They will have information on the record of customer complaints against that insurance company and can verify that they are licensed and approved to sell auto insurance in your state.

General Liability

General liability is a type of coverage most businesses must have for their own protection. Policies can help ensure that you do not have to pay the hefty expenses of out-of-court litigation, settlements, or judgements awarded by the courts. General liability insurance for businesses helps safeguard business owners against unexpected risks that could result in financial disaster. Keep your general liability policies forever to remain protected against the unknown.

About This Article

Co-authored by: Clinton M. Sandvick, JD, PhD Doctor of Law, University of Wisconsin-Madison This article was co-authored by Clinton M. Sandvick, JD, PhD. Clinton M. Sandvick worked as a civil litigator in California for over 7 years. He received his JD from the University of Wisconsin-Madison in 1998 and his PhD in American History from the University of Oregon in 2013. This article has been viewed 49,879 times. 69 votes – 53% Co-authors: 10 Updated: March 29, 2022 Views: 49,879 Categories: Insurance

Thanks to all authors for creating a page that has been read 49,879 times.

Documents that you do not need to keep

Determining how long to keep insurance records also involves knowing what you can throw out, and when. Here are a few items that you do not have to keep indefinitely:

  • Your main policy document. This is the multi-page document that includes all the details about your policy limits, discounts, coverage, endorsements and more. Many people hold onto these pages until they renew their policy — and that is fine. But it is not really necessary since many insurers offer digital access to these documents through your account at the company’s website. If your insurer does not have this functionality, hang on to them until you receive a new policy package in the mail when you renew. Once your policy has expired and you no longer are paying for it, you can discard these documents as well.
  • Canceled checks from paid premiums. Many banks no longer return your canceled checks. If yours does, you can shred the checks once you have reconciled them with your account.

How To Prepare To Leave a Job

Before quitting your job, review all of your options for health insurance. Remember that everyone’s medical and financial situations are different. You might benefit from continuing coverage via COBRA, or it may make more sense to join an individual plan through the marketplace.

Use these tips to make sure you’re covered when your employer-sponsored insurance expires:

  • Talk with your HR representative before you resign to learn how your employer’s insurance plan works and when you’ll lose coverage.
  • Consider quitting earlier in the month if your company lets you keep coverage until the last day of the month. This could give you the time you need to get new coverage—such as from a new employer—without having to pay for COBRA.
  • Gather any documents you’ll need to enroll in your new health insurance plan. For example, the marketplace offers a convenient checklist to help you apply for a plan.

Directors and Officers

Directors and officers liability insurance is a type of insurance that covers directors and officers against claims made while serving as an officer or on a board of directors. For smaller businesses, D&O claims may not occur very often, but when they do it can be financially draining to fight the lawsuits. You can generally discard a directors and officers policy after the term or after receiving a replacement policy.

Filing Policies

Sound risk management practices mandate having a system for filing expired policies, but how long should expired policies be kept in the file cabinet?

How to properly dispose of old insurance policies

Identity theft is growing across the U.S., according to the Insurance Information Institute. Your policy documents may contain names and addresses, policy numbers and other personal data, and an enterprising thief may use them for personal gain if your documents are found in the garbage or at a dump site. In general, you should always shred anything that has your name or identifying details on it.

A small home shredder is adequate for this work. Some office stores offer shredding services, and local banks or companies offer free shredding days regularly for residents in many areas.

Is there a best time to cancel?

Escrowed Homeowner’s Insurance

If your homeowner’s insurance payments are escrowed, it is relatively easy to avoid the hassle of waiting for refunds. You would simply call your lender at least 60 days prior to your policy renewal (the existing policy) and instruct the lender not to pay it. You should tell them you are shopping your coverage – for whatever reason – and will notify them when you have made a decision.

Once you find a new policy you like, contact your lender and approve the payment to the new insurer.

This should be done 60 days in advance to avoid having your lender pay the renewal for the policy you no longer want. It is not uncommon for insurers to send renewal invoices that early in the game. If your lender makes the payment, you may have to pay for the new policy out of your own pocket and wait for the refund check.

Lenders who hold your note and service your policy will often make more than one policy payment for one term (12 months) and simply ask you to apply the refund you receive from the cancelled policy to your escrow account once it’s received. Just be sure to send them the refund money or your escrow account will be short and you don’t want that.

Examples of these lenders would be big banks such as Bank of America, Wells Fargo, JPMorgan Chase, etc.

If your mortgage is serviced by a company other than the lender who holds the note, you will likely have to pay out of your pocket and reimburse yourself as described above.

Learn more about switching homeowner’s insurance companies when you have a mortgage.

Auto and Non-Escrowed Home Insurance

Both of these policies are paid by direct bill, meaning you personally pay the insurance either by mail or electronic funds transfer (monthly e-check or credit card).

There really is no rocket science to determining the best time to cancel these types of policies to avoid having a double payment out there and waiting for reimbursement.

You must simply determine the exact last day your “money runs out” on your existing policy. If you have paid through the 15th of the month, you should have your new policy start on the 15th and stop payments to your old insurer after that point.

What’s a reasonable time frame?

On average, you should prepare yourself to wait 2-4 weeks for your premium refund from an insurance company.

Let’s face it. The average human being (or company, for that matter) is not in a terrible hurry to return your money after you’ve told them to take a hike.

Not to mention the process typically requires signatures on mandatory cancellation forms, which might have to change a few hands before landing on the desk of the person (or computer) who writes the return premium check.

Video Transcript

Welcome to Quotacy’s Q&A Friday where we answer your life insurance questions. Quotacy is an online life insurance agency where you can get life insurance on your terms.

I’m Jeanna and I’m Natasha.

Occurrence Basis Insurance

Some insurance is written on an “occurrence” basis. With this type of policy, you are protected for any incident during the coverage period, even if it remains undiscovered and unclaimed until years afterward. Let’s say that in 1960, your family built a gas station and insured it against all hazards until 1970, when your family closed the station and the coverage lapsed. If the soil is discovered to be polluted in 2010 and you can prove it happened during the coverage period, the insurance company may have to pay the cost of cleanup. With occurrence-basis insurance, the safest thing to do is to keep copies of your policies indefinitely.

How Will Term Insurance Support My Financial Goals?

How long should term insurance last? The length of the term insurance policy that’s right for your family depends on your short and long-term financial goals. Let’s take a look.

Goal #1: Income Replacement

Term insurance coverage range: 10 years+

Here are just a few circumstances in which income replacement will be a primary objective in purchasing term insurance.

Do you have a partner who relies on you for financial support?

Is your partner currently employed full-time?

If you are the primary breadwinner in your household, and you don’t want your partner to be forced to go back to work right away after your passing then you’ll need to replace that income. Many financial advisors recommend purchasing coverage that is ten times the equivalent of your current income. This may be too much or too little term insurance, depending on your individual circumstances—your coverage needs are based on what you want for your family.

Does your partner have special needs or a disability?

If your partner has special needs or a disability which make it difficult or impossible for them to work, then you’ll need to purchase coverage sufficient to replace your income and pay for the extra care—such as a home health aide and/or therapies—that they require. If they will require care throughout their lives, you may want to investigate whole life insurance options as well.

Do you have children or other dependents?

If you have children or other dependents, in addition to providing for their primary care, you will also want to provide funds to pay for the services that you may have provided, such as childcare.

Goal #2: Long-Term Financial Support for Loved Ones

Term insurance coverage range: at least 10 years+

Another important part of deciding how much term insurance makes sense for your family is to decide what type of support that you want to provide for your loved ones. Here are some things to think about:

Do you want to contribute to, or pay, the costs of your children’s college education?

If you are planning to help pay for your children’s college education, then it is wise to keep in mind that the average cost of college tuition has risen steadily over the past 20 years. If your children are young, they may face in-state tuition as high as 40k per year in just ten years. If you want to protect your children from the burden of loans (which the majority of students require), then allowing for a significant rise in college costs is essential in determining the amount of coverage that you wish to purchase.

Will you provide for your children after they enter the workforce?

In addition to providing for your children’s care when they are still minors, you may also decide that you want to help them out financially when they become independent. Here are a few questions to think about:

  • Do I want to help pay for my children’s first home?
  • Will I help my children as they graduate from college and become established in their careers?
  • Do I plan to leave a trust for my grandchildren?

Do you plan to provide support to your partner, or an elderly parent or relative during their retirement?

If you planned to help your partner or an elderly parent financially in their golden years or if they require full-time or hospice care, then this expense should also be included when you look at life insurance quotes.

» Compare: Term life insurance quotes

Goal #3: Debt Repayment

Term insurance coverage range: 20 years+

If you have debt that you don’t want your family to have to pay after you’re gone, then you should add these amounts to your term insurance needs estimate. Examples of debt that you might want to repay include:

  • Mortgage
  • Car loans
  • Credit card debt
  • Private student loans
  • Business debts that you personally guaranteed
  • Healthcare bills

Of course, these goals aren’t mutually exclusive. Depending on your family’s needs, all of these goals may be included in your financial plan.

NRMC Recommendations

The Nonprofit Risk Management Center recommends that a nonprofit’s document retention policy should require all but claims-made policies to be maintained permanently. Now that policies are available electronically (you can either scan your policies into your computer system or request that the insurance carrier provide the policy in electronic format), storage takes up a lot less physical room. Instead of overflowing file cabinets or bookcases filled with 3-ring binders, you can save policies on your server. Of course you will have a sound backup system in place, will archive hard copies of policies offsite and inform key office staff or key volunteers where the backups and hard copies are maintained. You will also want to run tests of the backup media to make certain that they are capable of being reinstated in an emergency situation.

The Nonprofit Risk Management Center welcomes questions and comments at 703.777.3504 or info@.


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