How long should a business keep expired insurance policies?
From a minimum of three years to perfectly for five years, here are the 6 answers to the question, “How long should a business keep expired insurance policies?”
- For a Minimum of Three Years
- Not More Than Six Years
- At Least Three to Seven Years
- As Long as It’s Still Useful
- Best to Keep Them Forever
- Perfectly for Five Years
For a Minimum of Three Years
Businesses should maintain expired insurance policies for a minimum of three years. While some policies may require longer archival time frames, three years is generally sufficient for most insurance companies and organizations. During this period, the organization should ensure that all documents relating to the policy are properly stored and secured. This includes documentation showing any changes or cancellations to the policy as well as confirmation of payment and claims details.
Not More Than Six Years
Having been a business owner for fifteen years, I’ve learned that expired insurance policies should not be kept for any longer than six years.
Not only can keeping them take up valuable storage space, but they also fail to provide the necessary protection in the long term.
It may seem like a nominal task, but every few years I review my current policies and discard old ones as soon as possible in order to keep my business running smoothly.
Not only is it an important part of staying compliant with legal standards, but it’s also a great time for businesses to check and make sure their policies are still up-to-date and account for changing industry regulations.
At Least Three to Seven Years
It is generally recommended that expired insurance policies be kept for at least three to seven years. This is because insurance claims can often be filed long after the policy has expired, and having access to the expired policy can provide important information and documentation for the claim.
In some cases, the statute of limitations for filing a claim may be longer than the length of the policy, so it’s important to retain the expired policy in case it is needed in the future.
Additionally, expired policies may also be required for tax or auditing purposes, so it’s important to consult with a legal or financial professional to determine how long to keep them.
As Long as It’s Still Useful
I would say that a business should keep expired insurance policies as long as they’re still useful.
For example, if an insurance policy is expiring in six months and it includes a clause that requires you to pay for the full cost of any damages you’ve been accused of committing within the last year, then keeping it around for another six months after expiration may not make sense.I’d also say that businesses should keep expired insurance policies for longer than they think they need to. For example, if you have an insurance policy with a $10 million deductible on it and you think your business has no chance of ever being sued for $10 million or more in damages, then it might be tempting to toss out your old policy when it expires—but what if something goes wrong?
What if a customer sues you for $15 million? Then you’ll wish you had kept that old policy around!
Best to Keep Them Forever
The optimum method is to maintain the policies indefinitely. There have been instances when despite not having a real policy, clients could claim decades-old policies by previously saved declarations pages.
The disclosure rule and specific regulations for dormant claims can effectively prolong the limit indefinitely, even though the majority of claims covered under occurrence coverage have a two-year limitation period.
A solid general rule is to preserve the insurance for at least six years if you are convinced that you won’t face any claims for latent issues. Within this period, nearly all possible claims will have become invalid.
Perfectly for 5 Years
It is generally recommended that a business keep expired insurance policies for at least a few years after they have expired. Forget about such sort periods as days or months.
Therefore, a reasonable period is 5 years, where the bare minimum is 3 years. This is because expired insurance policies may still be relevant for various purposes, such as proving that the business had coverage in the past or making a claim under a retroactive policy.
Additionally, specific insurance policies, such as environmental or professional liability policies, may have long-term effects or obligations that extend beyond their expiration date. Before making any move, a business needs to consult with its insurance provider and legal advisor to determine the specific retention period for its expired insurance policies. It is better to archive certain documents for many years than to regret not doing so.
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