Trying to read through a car insurance policy with comprehension is not something even the pros can glide through without making some effort.
A poll conducted by Harris Interactive Poll – paid for by InsuranceQuotes.Com revealed that 87% of insured motorists had understood at least one part of their policy, while 36% said they had difficulty understanding any of it.
So many consumers don’t understand the terms of their home and auto insruance policies that lawmakers have taken note. Laws are on the books in 30 states to reinforce the notion that insurance policies should be readable to people who own them.
The Flesch Readability Test
In the early 1980s, some states said that a readable insurance policy is one that children in the eighth or ninth grade can read and understand. The Flesch Reading Ease test is applied to insurance policies in some states to measure document readability. The test is based on a 100-point scale. The closer test scores are to 100, the more readable the policy. In states that require a Flesch test, the passing score is anything between 40 and 50 points.
State Laws for Readability Vary
Connecticut lawmakers define “readable” documents in more specific ways. The layout for insurance documents must be standard, the font must be the same, “the use of unnecessarily long, complicated, or obscure words, sentences, paragraphs, or constructions,” may not be used. If a policy is 10,000 words or less, the entire document will be tested for readability. For policies that are more than 10,000 words, 200-word portions per page will be examined. Connecticut’s readability laws are similar to many others in the nation.
All of these measures are great, but policies don’t necessarily translate into easier reading material. So what’s missing?
I Live in a State with Readability Laws- I still Don’t Understand My Policy
One of the biggest areas of confusion for customers is knowing the difference between comprehensive coverage and collision coverage.
Here’s the difference:
Comprehensive coverage applies to damage when you’re not actually driving the car. If a tree falls on your car in the middle of your driveway you’re covered by comprehensive coverage. If you hit another car while you’re driving collision coverage is what will come to your rescue.
Where You Can Go for Help
If you still have trouble understanding the terms of your insurance policy agreement talk to your insurance agent or the customer service representatives for your company. It’s their job to help you understand what your policy does and does not cover.
If you’d rather talk to someone outside the company, state insurance regulators give free assistance to consumers. While the number of complaints against companies for unreadable documents is relatively small, state insurance regulators do address consumer complaints.
What if I Think I’m Covered But I Find out I’m Not?
Worst case scenario- you’ve fully read your policy before you’ve signed it, but discover after filing a claim that you didn’t have all the benefits you thought you would because of confusing language. You may have grounds to fight the insurance company through legal channels. Before you take them to court, see if you can get them to negotiate with you. Legal fees can climb exponentially so if a private deal can be worked out, this will save you time and money in the long-run.
Additional insurance reform is on the way. People in power have noticed that insurance policies are far too complex for the average customer and they’re trying to make sure your interests are protected. Until better policies are in place, take a little time to read over the general provisions of your insurance policy so that you understand what’s covered and what’s not before you find yourself filing a claim.