How long to keep insurance policies?

Ask NJMoneyHelp

Photo: pixabay.com

Q. How long do I keep old insurance policies for an LLC?
— Out of business

A. That’s depends.

We’re going to assume the insurance policies you’re talking about are liability policies, and we’re also going to assume you’re talking about policies that have expired or are no longer in force.

Premiums would be deductible, so you should think of your tax returns.

The IRS has three years from the date you file your tax return to audit the return, said Steven Gallo, a certified public accountant and personal financial specialist with U.S. Financial Services in Fairfield.

“Should your return be selected for audit and your deduction for insurance be questioned, you would be required to prove that the type of insurance for which you are claiming a deduction was indeed necessary for your business and that you paid the premiums required,” Gallo said. “Therefore, you would have to produce the policy as well as proof of payment.”

Based on these requirements, Gallo said, he generally tells clients to keep the records for five years to give yourself a little cushion for timing.

As for liability concerns, should a claim arise for a period in the past, the fact that you don’t physically have the policy does not mean that insurance company with whom you had coverage at the time of the claim is not liable, Gallo said.

“I would once again suggest that the five-year rule should be adequate, but remember that insurance companies have copies of all the policies it issues and you can always request a copy at a later date,” he said.

Email your questions to moc.p1544823233leHye1544823233noMJN1544823233@ksA1544823233.