The Value and Reality of Transparent Consumer Insurance Contracts

27 Pages Posted: 29 Oct 2022

See all articles by Kyle D. Logue

Kyle D. Logue

University of Michigan Law School

Daniel Schwarcz

University of Minnesota Law School

Brenda J. Cude

University of Georgia Department of Financial Planning, Housing and Consumer Economics

Date Written: October 27, 2022

Abstract

A central goal of insurance law and regulation is to promote clear, unambiguous, and comprehensible insurance policies in personal lines of coverage like auto, renters, and homeowners. Although few consumers read these policies at the time of purchase, comprehensible insurance policies can promote fair and efficient claims payments and enhance the capacity of the small subset of individuals who do read –including agents, regulators, academics, media, consumer watchdogs, and sophisticated consumers – to understand the scope of coverage provided by different companies and policies. Yet many informed observers are skeptical of legal and regulatory strategies designed to produce these benefits, bemoaning the opacity and complexity of personal lines insurance policies. Notwithstanding the importance of comprehensible insurance policies or the widespread skepticism about the attainment of this goal, empirical evidence evaluating the comprehensibility of personal lines insurance policies is virtually nonexistent. This article seeks to highlight this gap in critical evidence and to offer a way forward by describing a strategy to empirically test consumer understanding of insurance policy language and the factors that influence that understanding.

Keywords: insurance, personal lines, readability, insurance policy

Suggested Citation

Logue, Kyle D. and Schwarcz, Daniel and Cude, Brenda J., The Value and Reality of Transparent Consumer Insurance Contracts (October 27, 2022). Available at SSRN: https://ssrn.com/abstract=4260410 or http://dx.doi.org/10.2139/ssrn.4260410

Kyle D. Logue

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States
734.936.2207 (Phone)

HOME PAGE: http://kylelogue.net

Daniel Schwarcz (Contact Author)

University of Minnesota Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://www.law.umn.edu/profiles/daniel-schwarcz

Brenda J. Cude

University of Georgia Department of Financial Planning, Housing and Consumer Economics ( email )

Athens, GA 30602-3622
United States

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