HOW LONG IS LONG ENOUGH
How Long Is Long Enough ?
I haven ’ t come across this question in some time , but occasionally we are asked , “ Just how long do I need to maintain copies of my old policies ? Can I throw them out once I receive my replacement policies ?”
This isn ’ t as simple an answer as one may think . Record retention laws vary by state , but New Jersey Insurance Agencies are required to store this information for five years past policy expiration at which time retention isn ’ t required . For the most part , that seems like a reasonable idea and isn ’ t an undue burden on paper retention . Our agency has been around since 1919 and has insured probably over a million clients in that span , many of whom could have three - five policies or more that renewed annually . Prior to the computer age , we would keep full copies of every policy — including endorsements and policy changes — for seven years past expiration . We had a very large account with Iron Mountain who would store all of this paperwork for us , and a robust indexing program to be able to track which box out of thousands had to be pulled to retrieve records in the event they were needed .
There are two basic types of contracts : claims-made form or occurrence form . With a claims-made form , you could literally get rid of your expired policy upon receipt of the new one because claim coverage is triggered when the claim is made ( even if it happened 10 years prior , as long as you maintain a continuous claims-made policy , then you are covered ). An occurrence form ( which the majority of policies are ) covers the claim for when that policy was in effect . If a claim is reported today for an incident that happened 10 years ago , you need to know who insured you at that time .
This recently came up with one of our clients who were served with a wrongful death suit due to asbestos dating back to 1978 employment with the company . Researching their payroll records , they were able to confirm the individual did in fact work for them for a month in 1978 . Then came the tricky part : Would their defense be covered by insurance ? Since the policy in question was an occurrence form policy , the answer was maybe . Who wrote the policy in 1978 , and what were the exclusions at the time the policy was issued ? Is the insurance company in question still operating today ? The answer to these questions would determine whether or not somebody would step up to the plate and provide defense . In 1973 , the industry started to add the pollution exclusion followed by the “ absolute ” pollution exclusion in 1986 . Luckily for our insured , the asbestos exclusion didn ’ t come about until 1986 , so if they could track down the insuring company at the time , there was a good chance defense would be provided .
Luckily for the client — who has always been somewhat of a stickler for retaining records — they were able to track down their General Liability Policy for the period in question . Another bonus was that the company they did business with back then is still in business and operating today . We always offered — and they always chose — a stable and financially sound insurer . They could not determine if they had an umbrella policy at the time , and if so , who that carrier was . It will be interesting to follow this claim through the legal process and see what becomes of it . At least our client is relieved from defense costs and has a $ 1,000,000 limit available in the event of a judgement .
So that brings us back to how long is long enough ? With today ’ s digital world , the answer should be forever . Your policy and all of its forms should be scanned and saved digitally . You probably are already receiving the majority of your policies electronically . For any that you don ’ t , you should scan and maintain them in a safe , backed-up environment . At a minimum , you should have a spreadsheet with the effective date , expiration , insurance company name , limits purchased , and any notable exclusions in the spreadsheet . It just may save you a headache and financial stress in the future , which could be a long time from today as our client just recently learned . Don ’ t rely on your insurance broker to have this for you . It ’ s your company and future you are trying to protect for the long run ! +
BY : KEN HAGER CHIEF OPERATING OFFICER AT JGS
Ken Hager began his insurance career more than 34 years ago at JGS Insurance . Ken ’ s current role as Chief Operating Officer at JGS began in 1997 . Since that time he has been a guiding force in the direction and success of the JGS enterprise . Throughout the years , Ken has remained engaged with his customers and intently focused on their needs . He intently understands the risks associated with his clients ' operations and has been uniquely able to offer them superior solutions to their business needs .
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