Why Is Insurance Policy Language So Confusing? It’s Time for a Change.

Posted: 1 week, 3 days ago

When was the last time you sat down and read through your insurance policy? If you did, how much of it made sense without a dictionary or legal training? For most people, insurance policy language feels overwhelming, filled with legal jargon, and loaded with fine print that makes you wonder, “Is this even designed for me to understand?”

It’s not your imagination—many insurance policies are still written in a way that feels like it’s “by attorneys, for attorneys.” And this creates a major problem: the very people these policies are meant to protect often don’t fully understand what they’re covered for or, more importantly, what they’re not covered for.

How Did We Get Here? A lot of this language is a remnant from the past, when legalese like “whereas” and “herein” dominated contracts. While other industries, like law, are slowly shifting toward plain English in contracts, insurance has lagged behind. Why? In part, it’s due to some insurers leaning on technical wording as a way to limit liability or create barriers to claims. This results in confusion for the average customer, who just wants to know they’re covered without needing to sift through pages of exclusions and clauses.

The Real Cost of Confusion -The reality is that unclear policy language can lead to much bigger issues. Customers may be underinsured without realizing it or find out too late that an important exclusion leaves them vulnerable. For businesses, this could mean costly disputes or denied claims that threaten their financial security.

As an insurance professional, this is where I spend most of my time with clients—not just discussing coverage limits, but breaking down the exclusions, limitations, and warranties hidden in their policies. It’s not just about what’s covered; it’s about understanding what isn’t. This clarity is crucial to making informed decisions and avoiding surprises down the line.

Moving Toward Plain Language - It’s time for the insurance industry to follow the lead of other sectors and embrace plain English in policy drafting. Insurance is meant to provide peace of mind, not confusion. When clients understand their policies, they’re empowered to make better decisions about their coverage, and disputes are less likely to occur.

Until that shift happens, it’s critical to have a trusted advisor who can translate the complex language of insurance into everyday terms. That’s where we step in—bridging the gap between the policy and your understanding of it, so you can feel confident knowing exactly what’s protecting you.

Will Doing _____ Save Me Money on Insurance? The Answer Isn't Always Simple

One of the most common questions I get from clients is: "If we do ______, will it save us money on our insurance?" Whether it’s implementing safety training, or repairing sidewalks/parking lots, or adding carbon monoxide detectors, the short answer is usually “Yes.” But as with most things in insurance, the return on investment (ROI) isn’t always immediate or easy to quantify. Let’s break it down.

Reduced Premiums -This is the most obvious savings.

When you take steps to lower risk, like repairing a cracked sidewalk to prevent slip-and-fall claims, your insurance company might reduce your premiums. However, preventative maintenance and protecting your business is an expectation.

If you’re to see any discounts, you’ll likely see this reflected in your renewal quotes. But keep in mind, not all improvements lead to immediate savings, especially in a “hard market” like we’re in today. Some insurers may need to see the benefits play out over time before adjusting your rate.

Fewer Claims, Better History - Even if your premiums don't drop right away, making risk-reducing improvements can help avoid future claims. Fewer claims mean a cleaner loss history, which can lead to more favorable rates in the long run. Think of it as investing in the long-term health of your insurance costs. That is why it is important to view your insurance strategy as a 3-5 year plan versus the year-to-year that often involves “requoting”. This strategy often hurts a business in the long-term.

Access to More Insurers - Sometimes the benefits aren't in your premium, but in the options you open up. If you’ve got a property exposure visible on Google Maps or Google Earth, underwriters might refuse to quote your business. Many companies are also using technology to inspect roofs and other potential property risks.

Fixing these issues can make you more attractive to a broader range of insurers, giving you and your broker more negotiating power when it’s time to renew or shop for new coverage.

Conclusion: While it may not always be easy to quantify the savings, taking proactive steps to reduce risk has a positive impact on your insurance—whether it's through lower premiums, fewer claims, or more favorable market options. Ask yourself: Is this investment worth the peace of mind and potential savings on my insurance? The answer is probably yes.

Are you ready to implement a proactive, long-term strategy with your insurance? Here are a few resources that you may find helpful.

Or Contact us today to schedule a conversation or Request a Quote to get started.