Your practice can build up a substantial collection of records over the years. While nobody wants to be stuck holding onto documents that have outlived their usefulness, throwing away a document only to find out later that you need it can be a costly mistake.
by James West in Business Insurance on Monday, September 25, 2017
Insurance paperwork is particularly problematic—many practices are unsure of what they should keep and what they can safely send to the shredder.
To help you get started, here are five record retention tips* broken down by policy type you may want to consider:
Property policies provide coverage for a practice if there is a loss involving their owned, rented or leased property. Like occurrence-based policies, property policies cover any claim involving a loss that occurred during the policy term.
However, unlike occurrence-based policy claims, property losses are usually discovered shortly after they occur. Therefore, a retention period of six years should cover the chance of claims for this type of policy.
Time has no effect on your liability for a staff member’s injury. Your practice is still responsible for workers’ compensation exposures no matter when they occurred. In these cases, the policy that was in effect at the time of the exposure can be triggered to cover the claim. For these reasons, it is important to keep records of workers’ compensation policies indefinitely.
Occurrence-based policies cover losses that occurred during the policy term, no matter when the claim is made. Because of their long-term protection, occurrence-based policies should be kept indefinitely.
Claims-made policies cover claims made while the policy is active and, depending on the individual characteristics of the policy, they may also include a “tail” that extends coverage for a set period after the policy expires. The tail only covers a claim if it is the result of a loss that occurred during the time when the policy was initially active.
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 that they will come into play in the long term, six years after the tail expires should be an adequate retention period for these policies.
Claims-made policies include malpractice, directors and officers, and employment practices liability insurance.
Employee Benefit Plans
Employee benefits are regulated by the Employee Retirement and Income Security Act of 1974 (ERISA). In Section 107, the Act contains a general records retention regulation that applies to any plan that falls under the ERISA. The regulation requires records to be kept for at least six years after their filing date.
While the wording of the regulation does not specifically target the policies themselves, it is advised that insurance policy records for staff members be kept at least six years to ensure federal compliance.
Remember, the above tips are listed as suggestions and different retention periods may be necessary for your unique situation. It is important to evaluate the individual needs of your practice and make sure that your record retention policies meet those needs.
Have questions about business insurance? Contact a member of the NCMIC Insurance Services team at 800-769-2000, ext 8180. We would be happy to help.
*Tips provided by Zywave, Inc.