How long do you keep auto insurance statements?

The average person is free to toss their old auto insurance documents when the policy period is over, unless you have an ongoing claim involving the vehicle. You may want to hold on to your auto insurance statements for up to 7 years in the unlikely event of a tax audit, particularly if you have a business policy.

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Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates...

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance...

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UPDATED: May 19, 2020

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Here's what you need to know...

  • The most important information you need to retain your car insurance policy is your physical proof of insurance (insurance card) and your actual policy agreement
  • It is a good idea to retain the declarations page from your auto insurance policy for as long as you have the policy open
  • Information about the payment of your premium for your auto insurance policy could be relevant for tax purposes, as would all other billing statements. For this reason, you may want to keep a copy for seven years in the unlikely event of a tax audit by the IRS
  • If you have any pending claims under a car insurance policy, it is a good idea not to throw away any papers regarding the policy until the claim is totally resolved
  • If you need information about your car insurance policy, it is a good idea to start by contacting your auto insurance agent, who will retain copies of all pertinent information regarding your auto insurance policy

If you have an online account for your auto insurance, most of the information will be kept for your online.

However, it is always a good idea to retain a copy of the policy agreement and declarations page for any current auto insurance policy.

Because the IRS can audit taxpayers for returns regarding the past seven years, you may want to keep some form of documentation about your payments for insurance policies until then.

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Paying Your Premium

For most auto insurance companies, you will have the option to pay your auto insurance premium in one lump sum every six months or in monthly installment payments.

You will get an invoice for the payment of the premium. The most important reason that you would want to save information about the payment of your premium is for tax purposes.

In the unlikely event that you are audited by the IRS, you may want to have copies of all of your bills for the past seven years, which would include statements regarding the payment of your auto insurance policy. However, this is very unlikely to affect your tax payments.

One of the reasons it could be a good idea to hang onto information about your past payments and premiums is that you will have a clearer idea of whether your premium has increased and by how much.

There are many factors that increase the price of your premium, and you may want to discuss with your insurance agent why it went up in the event of an increase.

In the event that your premium increases, it may be a good opportunity for you to consider shopping around for other auto insurance options. When asking for auto insurance quotes from other companies, make sure that you still retain current coverage by paying your premium on time.

It is required by almost every state, and if you do not have current coverage for failure to pay your insurance premiums, this could mean that your insurance company can cancel your policy.

This will reflect on your record and may mean that you pay higher rates from other auto insurance companies.

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Important Auto Insurance Documents

One of the most important documents for your auto insurance coverage is your insurance card or physical proof of insurance.

In some states, in addition to having to maintain at least the required amount of auto insurance coverage, you must also carry physical proof of insurance (your insurance card) when driving.

If you are pulled over by a police officer or involved in an accident without having proof of insurance, you could face stiff penalties.

If you lose your insurance card, you can contact your insurance company to have a copy sent to you as soon as possible. It is never a good idea to get caught driving without car insurance and is not worth the hassle.

There should be no charge for your insurance company sending you a duplicate insurance card.

If you cannot remember your auto insurance company, you can contact the department of motor vehicles for your state because there will likely be a record kept on file from your auto insurance company pertaining to your current coverage.

You will still need to contact your own auto insurance company to have an additional card sent to you.

The other important document from your auto insurance policy to retain is your declarations page. This is where all of the important information regarding your auto insurance policy can be found.

In the event that you have to file a claim from an accident under your auto insurance policy, you may need to consult the declarations page for information about coverage under your current auto insurance policy.

You can also find information about your deductible from the declarations page of your policy.

Recap on Retaining Documents Regarding Your Auto Insurance Policy

The two most important documents to always have on hand regarding your auto insurance policy are your current insurance card (physical proof of auto insurance coverage) and your actual auto insurance policy.

From your actual policy, the declarations page is the most important to be able to find. Statements regarding your payment of insurance are likely only relevant for tax purposes.

To be safe, you might want to hold onto them for seven years in the event of a tax audit from the IRS.

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How long do you keep car insurance documents?

The average person is free to toss their old insurance documents when the policy period is over, unless you have an ongoing claim involving the vehicle.

  • You should only retain insurance documents for as long as necessary
  • Managing old car insurance policies is unnecessary
  • Pending or ongoing claims may cause you to retain expired policy period documentation
  • Using the shredder can allow you to get rid of insurance documents in a safe and private manner

One of the more common questions that are asked of insurance professionals is in regard to record retention of customer documents.

Many customers will say that they have insurance policies, bills for the premium they have paid, and so on going back 10 years or more.

Is it truly necessary?

Just how much paperwork and what documents do you have to keep and for the stuff that is being kept, how long should you be keeping it for?

Record retention is something that every single company struggles with, just as individuals do on their own.

Companies, though, have the luxury of coming up with standardized record retention schedules and will just purge stuff when it reaches expiration date.

As a consumer, it is much more of a manual process and it is about having an awareness of the documentation that you still have and what you truly need.

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What You Need to Keep

The only thing that you really need to keep when it comes to car insurance documents is that of your most current insurance policy.

You really do not even need to have the full policy on-hand if you have a copy of what is known as the declarations page of the policy.

The policy’s declaration page is the page where you have all of your coverage summary on-hand.

When you need to know what you have for car insurance coverage, all you have to do is refer to that current declarations page and you will get your answer.

The current declarations page is where you are going to see:

  • Your policy number
  • The named insured on the policy
  • The cars that are covered
  • The limits that you have
  • Your deductibles

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Where Insurance Companies Come Into Play

Insurance companies are on the hook for making sure that they have electronic copies of your full insurance policy.

They are not only going to have your current car insurance policy, but they are going to have electronic copies of your policies that are going to likely go back for years.

When you get to the point where your policy period has ended, where you are past the expiration date, it is then perfectly fine to throw away an old policy that has been renewed and replaced with a new one.

Use the Shredder

You always want to take advantage of the shredder when getting rid of insurance documentation such as this.

The shredder is going to ensure that your private information is kept that way so that it does not get into the wrong hands and potentially taken advantage of.

Once your old policy is ready to be rid of, throw it in the shredder and away it goes.

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Pending Claims

The one caveat to all of this is whether or not you have a pending or an ongoing claim that is being worked as part of the policy you are thinking of throwing away.

If you have a pending claim, or an existing one, be sure that you have that insurance policy paperwork on-hand, even if it has expired, as you may have to reference it as you are going through the claims process.

Knowing when you can purge any old documentation is very important as a consumer. You do not want to have to keep papers upon papers for years over time.

The quicker that you can get rid of this stuff, the more organized you are going to be.

Only retain your insurance documents for as long as necessary before replacing them with your renewed policies.

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Do I need to keep my old car insurance documents?

Expired personal policies are only needed to deal with any open claims that remain after they end. Business policies should be kept for tax purposes.

  • 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
  • Insurance companies will cancel coverage for vehicles you no longer own, managing your auto insurance policy for you

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?

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 portions 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 its 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

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 the proof of payment of your auto insurance premiums for up to seven years if you claim this deduction.

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References:

  1. http://www.iii.org/article/what-determines-price-my-auto-insurance-policy
  2. http://www.iii.org/article/can-i-drive-legally-without-insurance
  3. http://www.iii.org/article/is-there-a-difference-between-cancellation-and-nonrenewal
  4. http://www.iii.org/issue-update/compulsory-auto-uninsured-motorists
  5. http://www.insureuonline.org/consumer_guide_auto.pdf
  6. http://www.iii.org/article/understanding-your-insurance-deductible

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