Cyrus Dugger

Why Are Insurance Contracts Still Incomprehensible?

From Tpm Cafe:

Why Are Insurance Contracts Still Incomprehensible?
Chris Robertson's picture
By Chris Robertson | bio

Last week, State Farm agreed to pay 80 million dollars to settle suits filed by homeowners who were hit by Hurricane Katrina. Meanwhile, Congress will soon weigh legislation that could bring the biggest changes to the insurance game in decades.

Much of this litigation and legislation turns on the problem that insurance contracts are filled with incomprehensible language that fails to put consumers and regulators on notice as to what is and is not covered. For example, the industry refused coverage for Katrina, by characterizing much of the damage as “flood damage” and by relying on an arcane “anti-concurrent causation clause” that kicks in when there is even a drop of water. One commentator explains that insurance contracts “may as well be written in hieroglyphics. They are nearly impossible to decipher, [with] one incomprehensible clause after another.”[1] (keep reading)

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Posted at 2:40 PM, Feb 07, 2007 in
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