Old Auto Insurance: Toss Or Keep?

You should keep your auto insurance policy documents until your policy expires and any outstanding claims have been settled. This includes your insurance ID card, the declarations page of your policy, documents pertaining to a claim, and your monthly billing statement. However, there are some insurance documents that you don't need to keep indefinitely, such as your main policy document, cancelled cheques from paid premiums, and prior ID cards. Once your policy has expired and there are no outstanding claims, you can safely dispose of these documents.

When to throw away old auto insurance policies

Keeping a record of important documents is always a good idea, but it can be challenging to know which ones to keep and which to throw away. Here is a guide to help you determine when to throw away old auto insurance policies.

Experts agree that holding on to old auto insurance policies is unnecessary after the policy has expired. Once you purchase a new policy, the old one can usually be discarded. However, there are a few exceptions to this rule.

Exceptions

• Open or Pending Claims: If you have an open or pending claim on your previous insurance policy, keep the document until the claim is settled. Even after the claim is resolved, you may find it helpful to retain a copy for future reference.
• Outstanding Claims: If there are any outstanding claims on your old policy, keep the documents until they are resolved. This includes car accident claims or any other unresolved issues.
• Business-Related Policies: If your auto insurance policy is for a business, you may need to keep the documents for tax purposes. Consult a tax professional for advice, as you may need to retain these records for several years.
• Switching Insurance Providers: When switching insurance providers, it is advisable to keep the old policy documents until all claims are cleared. If you have a pending claim with your previous provider or if another driver has a potential claim against you, keep the relevant documents.

Documents to Keep

While you can discard old auto insurance policies in most cases, there are certain documents related to your current policy that you should retain:

• Insurance ID Card: This acts as proof of insurance and must be provided at the request of a police officer or in the event of an accident in many states. Keep it in your wallet, glove compartment, or as a digital file on your smartphone.
• Declarations Page: This page provides a summary of your policy coverage types, limits, exclusions, and claims-filing process. Keep it in a safe and accessible place until the policy period ends and any open claims are resolved.
• Documents Pertaining to a Claim: Keep all receipts, repair bills, medical expenses, legal fees, accident reports, and other relevant documents until the claim is processed and you receive your settlement.
• Billing Statements: It is advisable to keep monthly billing statements until your payment has been processed or the policy period has ended. For business-related policies, consult a tax professional, as you may need to retain these statements for tax purposes.

Proper Disposal of Old Insurance Policies

When disposing of old auto insurance policies, be mindful of identity theft risks. Old policies contain sensitive information, such as your name, address, policy numbers, and other personal details. Shred the documents using a cross-cut shredder or seek professional shredding services to protect your personal information.

What to keep in your car

It's a good idea to keep certain documents in your car, such as your insurance ID card, which acts as proof of insurance and must be provided at the request of a police officer or when you are involved in an accident. You should also keep the declarations page of your auto insurance policy, which gives a summary of your policy's coverages and deductibles. These documents should be kept until the policy period is no longer active and any open claims have been resolved.

In addition to insurance documents, there are several other items you may want to keep in your car for convenience or in case of an emergency:

• A small toolkit or multi-tool device
• Jumper cables
• Road flares or reflective triangles
• Tire gauge and air pump
• Spare tire, jack, and lug-nut wrench
• Water and non-perishable snacks
• First-aid kit
• Flashlight and spare batteries
• Umbrella
• Blanket
• Extra pair of gloves and socks
• Coins for parking meters
• Paper towels and tissues
• Hand sanitiser and wipes
• Reusable grocery bags
• Phone charger

How to store insurance documents

Keeping your insurance documents safe and organised is important. Here are some tips on how to store them:

Gather all your insurance documents

Most policies include a summary statement of benefits, which lists your policy number and coverage amount. The summary page will also list the length of your coverage term, the date when you initiated the policy, and your beneficiaries. Your documents should also contain the insurance policy details, which can extend for several pages. While it might not be fun, it's important to include the terms and conditions in your documentation. If there are any other papers pertaining to your coverage, like monthly statements showing your insurance premiums and payments, keep them too.

Some people have multiple insurance policies. Make sure you gather the documents for every policy you currently own.

Designate a physical storage location

Designate a central storage location for your physical insurance documents. A fireproof safe is a great option as it's inexpensive and will keep your documents safe and secure, even during a fire. You can also save copies of your documents in another place, such as a safety deposit box at a bank or another safe at your office, in case your fireproof safe is stolen or damaged during a disaster.

Designate a digital storage location

It's also smart to have digital versions of your insurance documents. Digital versions are accessible whenever and wherever you need them. If something happens to your physical copies, you can easily pull up your digital documents. Given the importance and sensitivity of these documents, treat them securely, perhaps on a secure hard drive (which you can also store in a fireproof safe) and in an encrypted destination in the cloud.

Document your documents and tell your family where they are

Insurance documents can be lengthy and confusing, especially to people who are unfamiliar with your policy. Categorise your insurance documents to prevent confusion among your loved ones.

Start by creating a comprehensive inventory of all your insurance policies, listing each type of policy you own and who provides the coverage. You should also include key information like the policy number, the insurance agent's contact information, and the coverage amount.

Then, discuss your insurance situation with your loved ones or any other beneficiaries, and tell them where they can find your insurance documents. If you keep the documents in a fireproof safe, provide your loved ones with a key. You can also give them the details needed to access online copies of your documents.

Regularly review your documents to ensure they're up to date

It's a good practice to review your insurance documents at least once a year. Picking a specific date (and sticking with it) ensures you won't overlook anything important.

How to dispose of old insurance documents

Keeping old insurance documents for too long can lead to unnecessary clutter. However, it is important to know which documents to keep and for how long, and which ones to dispose of and how to do it safely. Here is a detailed and direct guide on how to dispose of old insurance documents:

Insurance Documents to Keep

• Insurance ID card: This acts as proof of insurance and must be provided at the request of a police officer or when involved in an accident. Keep this card in your wallet, glove compartment, or centre console, or as a digital file on your smartphone, for as long as the policy term is valid.
• The declarations page of your insurance policy: This provides a snapshot of your policy coverage types, limits, and details on what could be excluded from your policy. Keep this document in a safe and accessible place until the policy period ends and any open claims during this period have been resolved.
• Documents pertaining to a claim: Keep receipts from repairs and pictures from an accident until your claim is processed and you've received your settlement.
• Monthly billing statements: Keep these until your payment has been processed or the policy period has ended. If the policy is for a business, consult a tax professional, as they may recommend keeping statements for a few years.

Insurance Documents You Don't Need to Keep

• Your main policy document: This multi-page document details your policy limits, discounts, coverage, endorsements, etc. If your insurer provides digital access to these documents, you can discard the physical copies. Otherwise, keep them until you receive a new policy package when you renew. You can dispose of these documents once your policy has expired and you've paid for it in full.
• Cancelled cheques from paid premiums: If your bank returns cancelled cheques, you can shred them once you've reconciled them with your account.
• Prior ID cards: Only the insurance ID card displaying your current coverage period is necessary. Expired ID cards can be shredded.

How Long to Keep Insurance Records

In general, keep insurance statements until your policy has expired and any outstanding claims have been settled. Keep old insurance policies until there are no more outstanding claims. If your policy is for a business, you might need to keep insurance documents for tax purposes for up to seven years.

How to Dispose of Old Insurance Policies

Identity theft is a growing concern, and insurance documents contain sensitive personal information. To avoid this, always shred any documents with your name or other identifying details. Use a cross-cut shredder, which cuts the pages in two directions, making it harder for potential thieves to access your information. If you don't have a home shredder, office stores offer shredding services, and local banks or companies sometimes host free shredding days.

For digital documents, you can delete them from your physical and cloud drives. If you're particularly concerned about the safety of your information, consider physically destroying the hard drives.

What to do if you accidentally throw away current policy documents

If you accidentally throw away your current auto insurance policy documents, don't panic. There are a few steps you can take to rectify the situation:

• Contact your insurance agent or customer service: Get in touch with your insurance company as soon as possible. They will have copies of all your paperwork on file, and you may also be able to access them online through your account on their website. Explain the situation, and they should be able to provide you with new copies of the discarded documents.
• Take preventative measures: To avoid this issue in the future, consider storing your important documents in a safe and secure location. This could include a locked drawer, file cabinet, or a portable, fire-resistant lockbox. You can also store digital copies on your computer, external hard drive, cloud server, or flash drive. That way, even if the physical copies are accidentally discarded, you'll still have access to the information.
• Review document retention guidelines: While it's important to keep current policy documents, it's also helpful to know which documents you can safely discard. In general, you should hold on to all insurance records until your policy has expired and any outstanding claims have been settled. However, once your policy has ended and all claims have been resolved, you can usually dispose of the old documents.
• Practice safe disposal methods: When it comes time to dispose of old insurance documents, be sure to use a cross-cut shredder to protect your personal information from potential identity theft. Alternatively, you can take advantage of shredding services offered by some office supply stores or free shredding events hosted by local banks or companies.

By following these steps, you can minimize the impact of accidentally throwing away your current auto insurance policy documents and improve your document management practices for the future.

Frequently asked questions