How Long Should Your Business Retain Insurance Policies?

The Power of Old Business Records: A Lifesaver for Our Client

We once had a case for a client who was sued by the government because the client was a tenant in a building that sat on contaminated soil from discharges that occurred 20 years earlier by other parties but were more recently discovered. Tenants and property owners can have liability for the costs of clean-up even when they were not responsible for the contamination that occurred years in the past.

Thankfully, my client had boxes of business records from 20 years earlier that were forgotten and collecting dust year after year. Those boxes came to our client’s memory, and we found invoices for insurance policies and were able to track down the carrier. The carrier honored the policy and insured our client for his defense and paid for a settlement on the claim. Had our client not kept that box of records, he may have had to file bankruptcy over the claim.

The moral of the story is to maintain all your insurance files – FOREVER! With digital storage, it is easier than ever.

Expanding Liability Scenarios: Businesses and Sexual Abuse Claims

As another example for the need to retain insurance policies, California has expanded the statutes of limitation relating to sexual abuse claims suffered when a person was a minor.  In January 2020, California enacted Assembly Bill 218 (AB-218) which extended the time limit for commencing an action for recovery of damages suffered because of childhood sexual assault.  Under this act, a victim has until they are forty (40) years old to initiate an action to recover damages for such an assault.  The action may be filed against (1) an individual person for committing the act of sexual assault, (2) any person or entity who owed a duty of care to the victim if a wrongful or negligent act by that person or entity was the legal cause of the sexual assault, and/or (3) any person or entity if an intentional act by that person or entity was the legal cause of the sexual assault.  

Consequently, sexual abuse related claims against a business organization such as negligent hiring, negligent supervision, negligent retention, and negligent failure to warn are becoming more frequent for incidents that occurred years in the past.

Safeguarding Your Future: Retaining Essential Insurance Records

To avoid the expense of having to prove the existence of coverage at any given time, it is vital that business organizations maintain and retain all insurance policies in an easily accessible place.  If any of your prior insurance policies have been misplaced or destroyed, you should reach out to your past insurance brokers or carriers and obtain copies of each missing policy so that the policies are on hand should you need them in the distant future.