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Do I need to keep my old car insurance documents?

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Here's what you need to know...

  • If you have copies of previous auto insurance policies or certificates of insurance, you can likely toss them when you sign up for a new insurance policy
  • The only reason to keep a copy of a previous auto insurance policy is if you have an open claim under that policy while you are signing up for a new auto insurance company
  • Also, if you think that another driver could file a claim against you under your past auto insurance company

If you are wondering what to do with copies of your past auto insurance policies or certificates of auto insurance, you probably do not have to keep them any longer when you sign up for a new auto insurance company.

The only reason that you may need to keep a copy of them is if you have a pending claim open under your current auto insurance coverage and are looking to switch to another one.

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What happens with your old policies when you switch to a new auto insurance company?

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Once you sign on with a new auto insurance company, your previous policy can be canceled. At that point, it will no longer be effective and you will no longer be responsible for paying the premiums under that policy.

When your auto insurance policy is canceled ahead of the expiration of your policy term, you will receive a refund for any of the unused portion of your premium.

At this point, you cannot file a claim under your previous auto insurance company, so there is no reason for you to hang onto a copy of your past auto insurance policy. The caveat for this occurs when you have an open claim under your previous auto insurance policy.

The reason that you would need to retain a copy of the previous auto insurance policy in this scenario is that you need to know exactly what is covered under your policy.

You also need to know the requirements you must follow in terms of supplying the necessary information to your previous auto insurance company in the claims process.

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If Another Driver has a Potential Claim Against You

If you were involved in an accident, another driver could have a claim against you that has not yet been filed.

You will want to retain a copy of your auto insurance policy in this scenario because you need to know exactly what is covered under your auto insurance policy.

One of the reasons that you may be looking to change auto insurance companies is that you are not satisfied with the way that your current auto insurance company is handling your claim.

This may be a tough way to learn the lesson that getting the lowest possible rate on your auto insurance policy should not be the only reason that you choose an insurance company.

Instead, you must also consider the reputation of the auto insurance company and their record for handling claims from their insured.

If you are shopping around for different auto insurance quotes, then make sure you check with the department of insurance for your state.

They will have information on the record of customer complaints against that insurance company and can verify that they are licensed and approved to sell auto insurance in your state.

Keeping a Copy of Proof of Payment for Tax Reasons

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While the personal use of your vehicle cannot be counted in your vehicle expenses in terms of a tax deduction, you may be able to deduct the expenses related to your vehicle for business purposes.

This is especially true if you maintain an auto insurance policy specifically for your business vehicle.

You will need to show the exact cost of your auto insurance premium in order to tax this tax deduction. The IRS may audit your tax returns for a period of up to seven years.

If you take a tax deduction, you should be prepared to show accurate documentation of it. This is why you would want to retain proof of payment of your auto insurance premiums for up to seven years if you claim this deduction.

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