“[Policies are] written by lawyers for lawyers,” according to a safety engineering company executive, who suggested insurers might be intentionally writing their policies in complicated legalese “because they are looking for a way out [of paying claims]. They leave lots of escape hatches.”

“Why can't they communicate in plain English?” complained a collection agency buyer, who said the language in his policies was so incomprehensible that the documents “might as well be written in Greek.” He added that he hoped his coverage wouldn't end up being a Trojan horse, with unpleasant surprises come claims time.

The focus group participants acknowledged that commercial insurance is not exactly a high priority for them, given the many other pressing business decisions on their plates. However, most agreed that if a major insurance claim is rejected because of some exclusion in the policy they either didn't know about or didn't understand, it could really hurt their bottom lines—and perhaps even put them out of business.

So how do small-business leaders cope? They depend on their agents and brokers—not just to read their policies and reassure them their coverage is sufficient, but also to be in their corner and advocate for them if a carrier rejects a claim based on some technicality in the contract.

There is a practical consideration as well in having agents and brokers check their coverage, in that it gives buyers a convenient target to sue in case there is some oversight the intermediary either didn't spot or failed to adequately explain to the client. That's why we have errors and omissions coverage, right?

But I believe this is a poor way to conduct business. Buying insurance shouldn't just give the buyer the right to sue. Misunderstandings about coverage terms and conditions can create bad feelings toward a particular insurer and fuels distrust of the industry in general.

Indeed, I think it would make far more sense—and position the industry in a more positive, trustworthy role—if they simply drafted their policies so that reasonably bright insureds could understand what coverage they are purchasing, as well as what restrictions and exclusions might apply, and under which conditions.

It's no secret that most small-business customers are not sophisticated insurance buyers. They don't have the time or inclination to become truly educated consumers. They also do not have professional risk managers on staff trained to anticipate exposures and spot potential coverage gaps in an insurance policy.

Indeed, small-business buyers resemble personal-lines consumers. Their knowledge of insurance and risk management is often limited, and if they're lucky (meaning, few or no claims), they don't deal with their policies very often. They buy on faith—both in the insurer not to set trap doors to avoid paying claims, as well as in their agent or broker to serve as a de facto risk manager.

Insurers are not totally to blame here. Some of the focus-group members said they just couldn't be bothered reading an insurance policy—that's what they pay their agents and brokers to do. But many of them sounded genuinely interested in getting business-insurance policies they can easily comprehend, so they don't have to depend so heavily on their intermediaries.

There has to be a better way to handle this. I realize insurance is a contract, and that sometimes legal documents must be carefully worded so there are no openings policyholders can exploit to force the payment of claims that the carrier had no intention of covering.

But on the other hand, carriers that offer more transparency and clarity in their coverage documents might gain a competitive advantage. Agents and brokers might be more willing to represent insurers that provide policies their customers can comprehend on their own, instead of depending on the intermediary's E&O policy to cover the consequences of any misunderstanding.

One point emphasized by the focus-group members was that insurers interested in following the lead of the personal-lines market by selling commercial coverage directly to small-business consumers would have no shot unless they write their policies in plain English laypeople can easily grasp.

But even those committed to writing through the agent channel could enhance the customer experience by communicating more effectively via a document that is the foundation of the entire client relationship—the insurance policy.