New Bill Requires Insurance Policy Readability

03/23/2010

Lawmakers in one state have taken efforts to increase readability of insurance policies.

Colorado House Bill 1166 requires that automobile insurance policies, health benefit plans, limited benefit health insurance, dental plans, and long-term care plans be written at or below the 10th grade reading level. It also restricts policies in length, preventing them from exceeding 3 pages or 3,000 words.

This law will pertain to insurance issued or renewed after July 1, 2011. Fines and penalties would be imposed by the commissioner on insurance companies that violate these regulations.

A recent editorial by the Denver Post urged lawmakers to approve the bill, saying that it should not be difficult to craft policies at or below the 10th grade reading level.

"Given that many Coloradans didn't go to graduate school or pursue a degree in law, it's ridiculous that they are asked to purchase policies only an attorney could understand - especially given the fact that software that's been available for years allows writers to easily score a text's readability," the editorial wrote.

Easier readability may improve consumers' confidence in the policies, they hope. The Denver Post commented that this increased sense of trust may also prove beneficial to the insurance industry.

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