There is no doubt insurance policies are complicated and challenging to read for policyholders, and sometimes even for agents and other insurance professionals. Your customer will leave with the policy at the end of the day and will recall many things you explain to them, but the policy speaks in your absence. It is your job to make sure it is easily understood by your customer.
Why is an Easy-to-Read Policy Important?
It is important to help agents advise policyholders correctly and a simple and easy-to-read policy helps with this. It can be difficult to know how to make policies easier to read, but this is worth considering. An insurance policy is a large investment for your customer, and they deserve to understand what they are purchasing.
The simpler the policy the better. Courts tend to rule in the favor of the policyholder if there is any misunderstanding regarding policy language. When your customer believes they have coverage for a loss they suffered due to misreading a policy, it will likely cost you time, money, and stress to resolve it. It may even cost you the customer.
A well-written and easy-to-read policy can also help with E&O issues. If a customer raises an errors and omissions concern, an easily understood policy can help show the policy intent was clearly communicated to the customer.
3 Ways to Simplify Insurance Policies
Here are three ways to make insurance policies easier to read:
- Use Simple Language and Explain Jargon: You have likely heard this before, but it is worth repeating because we still fail at this in our industry. Sometimes we must use specialized insurance terminology, but we still need to provide definitions and simple explanations when jargon is unavoidable. Otherwise, simpler language should prevail, both in the policy and verbally when agents converse with policyholders to explain policy terms.
- Make Sure you Understand the Policy: You might consider writing more with carriers that have made efforts to simplify policy language and coverage. An insurer with an easier to read policy could edge out its competition if all other terms are comparable. Both customers and agents may prefer their easy-to-read policy and be more satisfied with the experience.
- Bundle Several Types of Coverage With the Commercial Multiple Peril (CMP) Policy: This may help to simplify the experience, as well. The policyholder will have one policy that combines multiple coverage types. This eliminates the need to understand different policy terms, conditions, and exclusions.
You might consider an all-risk, or open perils, policy instead of named perils to reduce complexity. The named perils policy lists all the covered perils plus any exclusions, so using the all-risk form may provide an easier-to-read experience.
Take the Time Your Policyholders Need
Spending a little more time at policy inception to clarify and explain terms can save you time and money in the long run. Policyholders who do not understand their policy may think they have coverage when they do not, or they may not understand why a loss is excluded. Combining an easier to read policy with a thorough explanation will ensure your policyholder is well-educated.
Remember, your customer’s time is valuable, and they likely want to spend as little of it as possible thinking about their insurance needs. Many customers dread renewal time because they fear price increases and do not understand the complexities of their policy. Using a simpler policy and ensuring it is easier to read lets your customer spend less time worrying about whether they are protected.
When your customer understands all of the benefits, they will also feel better about spending money for their coverage. When they can see the full value, they will be happier to renew, even if the rate has increased since last time.
To learn more about ways to make insurance policies easier to read, get in touch with our team at NIP Group today. Our licensed professionals will be happy to answer any questions you have.
Looking to make a genuine impact with your insurance clients? Read this article to learn more about recognizing your clients’ pain points.