We in the insurance industry move paper better than just about any other industry, and in the end, we will find a way to have that paper end up on your desk. The question is, how long should you keep all of the paper we give you? Rest assured, you will need that paper the day after you send it to the shredder, even though it was sitting in a file cabinet for 3 years untouched…that’s just the way things happen.
One way of establishing a ‘what to keep and what to shred’ program is to base it on the insurance policy types:
The nice thing about property claims is they’re usually discovered shortly after they occur, limiting how long policy records need to be kept. For such policies, a retention period of six years will generally cover the chance for most claims.
Occurrence-Based Liability Policies
Essentially active forever, occurrence-based policies cover any loss that happened during the policy term, no matter when the claim is made. It is not unusual for these claims to happen decades later. Even if processes have changed, a company may be held responsible for their past actions. Companies in the 1970’s probably had no idea asbestos was going to turn into what it did. Because of their long-term protection, these policies should be kept in some format indefinitely.
The policy’s coverage is based on when a claim is filed and not on the date when the loss occurred. Because there is a limited chance they will come into play in the long term, six years after the tail expires is generally an adequate retention period for claims-made policies.
Time has no affect on an employer’s liability for employee injury. There are many cases where employees are exposed to hazards that take years to fully develop into a serious condition. Because of this, it is important to keep records of workers compensation policies indefinitely.
Retaining the right documents can make life much easier if a claim is filed. While there are limited requirements for record retention, the real benefit for a company is ensuring that claims are covered by the appropriate policies to limit out-of-pocket expense. Evaluate your individual situation before developing your record retention policy. Remember, these are just suggested time frames for document retention – if you feel your company may need to keep records longer, don’t hesitate to do so.