I wouldn't sweat the "right" folders for stuff too much--they key is how you're likely to remember it first. In my files, "house insurance" is under H, while "car insurance" is under C (even though I drive a pickup truck). It's just how I think of stuff.
As for paid bills, I toss them. I used to save them by month, but I haven't had a need to refer to them. Between Quicken and my checking statements, I can probably research any questions that might come up.
Of course, your needs and thoughts might be different.