After insurance policies expire, many dealerships just throw away the paper copies and delete the digital files. In certain situations, though, you may need to produce these policies even after the coverage period has expired.
Embezzlement and employment practices
A good example of this occurs in cases of employee embezzlement. Employee dishonesty (such as embezzlement) is sometimes covered under a commercial crime or theft policy. However, embezzlement often isn’t uncovered until years after the crime has taken place.
For instance, suppose that, during an audit, a dealership learns an employee was embezzling funds three years ago. However, the insurance policy that covered this theft has since expired. To receive an insurance payout, the dealership may need to produce the policy documents to prove that coverage was in effect when the crime occurred.
Also consider employment practices liability insurance (EPLI). These policies protect dealerships from employee claims that their legal rights have been violated. Sexual harassment is one type of violation that’s covered under most EPLI policies, but sexual harassment claims can sometimes arise years after the alleged crime occurred.
If an employee complaint of sexual harassment arises after an EPLI policy has expired — but the alleged incident occurred while coverage was in effect — the dealership may have to produce proof of coverage to receive a payout.
Better safe than sorry
You can’t necessarily rely on your insurer to retain expired policies or readily locate them. It’s better to be safe than sorry by keeping old insurance policies in either paper or digital format even after they’ve expired. This is the best way to ensure that you’ll receive insurance payouts for events that happened while coverage was still in effect.
© 2019 Thomson Reuters