A recent caller to the Free Legal Service Program I operate for IIAG members told me about a conversation he recently had with an insurance company representative regarding the above question. The representative told the caller that, at least with respect to motor vehicle liability policies, Georgia law required an agent to keep every copy of such a policy and related documents that was issued to an insured for as long as the policy was renewed by the issuing insurance company. In the situation in question, that would have required the agent to keep polices and related documents going back over 20 years.
I told the caller I thought the insurance company representative’s view was not correct as a general rule, but the rule may be different for motor vehicle policies due to the existence of uninsured motorist (“UM”) coverage requirements for such policies. After some research on the relevant statutes, I have concluded that motor vehicle policies are subject to the same record keeping requirements as all other types of insurance policies. However, agents would be wise to keep any documents related to UM coverage selection by their insureds for as long as their motor vehicle policies are renewed with the same insurance company for the reason explained below.
RECORD KEEPING REQUIREMENT
The Georgia Insurance Code requires that agents keep “a record of all transactions consummated under” their license for “a term of five years beginning immediately after the completion of the transaction or the term of the [insurance] contract , whichever is greater.” O.C.G.A. Section 33-23-34 describes what documents and information must be kept to satisfy this requirement; the first thing being “a record of each insurance contract procured or issued.” It provides that the required documents and information can be kept either at the agent’s place of business or at the home or regional office of the insurance company involved if that office is located in Georgia.
What constitutes an “insurance contract” is not defined in this section of the Georgia Insurance Code. The insurance company representative’s position was that the renewal of an existing motor vehicle insurance policy was just a continuation of the original “insurance contract”, the term of which would not end until the policy was no longer renewed. The portion of the Georgia Insurance Code that governs the renewal of motor vehicle policies defines a “policy” as a “written contract of or written agreement for or effecting insurance.” It defines the renewal of a policy, in pertinent part, as the “issuance and delivery by an insurer of a policy superseding at the end of the policy period a policy previously issued and delivered by the same insurer.” From these definitions, it is clear the renewal of a policy results in the issuance of a new insurance contract that takes the place of the previously existing insurance contract.
There is no reason to believe this definition would not apply to the renewal of any other type of insurance policy. Thus, copies of motor vehicle and all other types of insurance policies, along with the other information specified in O.C.G.A. Section 33-23-34, must be kept for at least five years after the end of the term of each policy. This record keeping requirement can be satisfied electronically if the requirements described in this post are met. In addition, as noted in this article, there may be reasons for keeping such documents and information longer than five years.
UNINSURED MOTORIST LAW EFFECT
One such reason is the way Georgia’s UM law works and the requirements imposed by the Georgia courts on proof of what UM coverage is in effect. Under the current version of the UM law, when a motor vehicle insurance policy is first issued, there is a presumption that the limits for the required UM coverage are equal to the limits of the liability coverage provided by the policy. The insured has the right to elect to have lower UM limits or no UM coverage at all.
However, the Georgia courts have held that the burden is on the insurance company to prove that such an election was made by the insured. If, as was the case with the caller’s situation, the insurance company cannot provide proof (usually in the form of a writing) that such an election was made by the insured, the insured is entitled to UM coverage equal to the liability coverage limits in their policy. This is true even if, as in the caller’s situation, the declarations page for the policy has consistently shown the UM coverage as being for a lesser limit.
To protect the agency from an E&O claim by the insured or a claim like the insurance company tried to make against the caller, agents should keep all documents regarding elections made by their insureds regarding UM coverage for as long as the policy with respect to which those elections were made is renewed by the same insurance company.