No one understands

It's strange how many attorney jokes there are. Actually, that's not correct. There are only five original attorney jokes. The rest are true stories. So do you know the difference between an attorney and a vulture? Well, the attorney gets frequent flier miles. We could go on but this is supposed to be more serious as a comment on the ability of lawyers to take something incredibly simple and make it amazingly complicated just by writing it down. Despite the fact there are 30 states with laws to compel insurance companies to write their policies in plain English, the statute was written by lawyers so the insurance companies have difficulty in understanding what they are supposed to do. This leaves the National Association of Insurance Commissioners (NAIC) with an interesting challenge.

One of the things the NAIC tries to do is write national standards for the insurance industry and the laws that regulate them. There has been much discussion on the problem of obscure English and efforts to write some of the standard clauses in easily understood sentences. Unfortunately, there's no sign any of the insurers will adopt any of these suggested model terms or comply with any of the draft laws. Indeed, when you look at their track record, they bait and switch their policyholders anyway. Even if terms look easy to understand, there's often a backdoor allowing the companies to argue they need not pay on claims. If we wanted to be unkind, we could suggest the insurance industry's secret to making millions in profit is to talk big about how generous it will be and then, after it has collected in all the premium income, pay no more than will keep a church mouse happy for a year.

In a recent survey, about 15% said they never read their policies. Of those who did, about one-third said they were very difficult to understand. So what should you do? The answer is both easy and a waste of time. Before you sign on the dotted line, most insurers will answer all your questions and explain anything you find difficult. Unfortunately, this is a waste of time because even if you record the discussion, there's a standard clause in all insurance policies saying that anything said before you sign is not a part of the agreement. So the insurer can give you one explanation before you sign, and then argue the opposite if you make a claim. This is deeply frustrating but you should blame the courts for consistently holding these clauses valid. The judges explain the words in the policy are the same for everyone. You cannot get an unfair advantage by asking questions before you sign. It always comes down to a court to decide what the words mean should there be a dispute.

All this would be a joke if there was not a mandate for us all to get a minimum amount of liability insurance. So you could be like the 15% that decides which policy to buy on the premium rate in the auto insurance quotes without reading the policy. Or you could use the auto insurance quotes as a starting point to ask as many questions as possible before you buy. At least, there will be fewer bad surprises when it comes to making a claim.