Insurance contracts are complicated documents, especially for the average consumer. Consequently, most states require insurers to draft policy language to comply with “readability” standards to make it easier for consumers to understand complex coverage terms. Recently, regulators have focused on the extent to which policy forms are physically accessible to consumers.
The National Association of Insurance Commissioners formed a Transparency and Readability of Consumer Information Working Group in 2012 to address this issue. “Transparency,” in this context, refers to the ability of consumers to obtain and peruse different carriers' HO policy forms before purchasing coverage.
Traditionally, consumers purchase coverage from an insurer based on a broad summary of the insurer's contract terms, usually the declarations page. But if a prospect wants to delve into a company's coverage terms, he would have to wait until receiving the company's entire base policy form in the mail—usually only after the customer purchases the policy. In other words, you have to buy the policy before you can know which losses are covered.
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