How Long Should I Keep Expired Insurance Policies?
Only about 40 percent of Americans are confident they can quickly dig up their important documents, according to a Consumer Reports study reported in 2010. Less than half think they can find those records after a little looking. Getting rid of all the expired insurance policies you don't need is one step toward better organization. How long you should keep them depends on how they are written.
Experts generally agree if you have renewed a "claims made" insurance policy, you can get rid of the ones preceding it. Because these policies only protect against claims made during the life of the policy, there's no reason to keep them after they have expired. Most U.S. insurance companies write this type of policy. If you have trouble finding the language in your documents specifying which kind of coverage you have, ask your insurance agent.
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.
Consumer Reports recommends you shred old claims-made policies as soon as you renew them. The personal finance website Bankrate notes this doesn't apply to a policy with an unresolved issue such as an unsettled claim. The Nonprofit Risk Management Center recommends storing policies in digital format. You can do this by scanning them into your computer or asking your insurance company to e-mail you digital copies.
Bankrate also recommends keeping all copies of policies that are continuous until canceled -- such as life, health, disability and long-term care insurance -- until coverage ends. In these cases, where coverage has changed over time, it may be important to know the earlier terms of the policy.
I am a retired Registered Investment Advisor with 12 years experience as head of an investment management firm. I also have a Ph.D. in English and have written more than 4,000 articles for regional and national publications.