How To Improve Your Policy

Insurance policies typically are so hard to read that customers have been conditioned to avoid thinking critically about how their wording can be improved. The pain from trying to understand how a policy's pieces come together is akin to the shock administered to a lab mouse every time it goes for some cheese. After a few jolts, insurance buyers tend to skim over many policy provisions, make sure the limits and price are right, and move on to the next task for the day.

But it usually pays off to spend a day or two reading the entire policy carefully and thinking of ways to make the policy do exactly what you want it to do. Ask yourself "what is my dream coverage"? Then explore ways to work language providing that coverage into your policy. Our firm was recently involved in a case with a client whose property policy had a complicated valuation provision in which the coverage provided was defined to be "the lesser of" X, Y or Z, given the circumstance of the loss. Upon renewal, the policyholder asked the broker, "Why can't the minimum payout always be X?" Good question. The broker changed the wording to say that losses are valued simply as X and the underwriter accepted the change. When a claim arose, the insurance company's claims handler instinctively began asking questions about Y and Z, but we quickly pointed to the language in the policy and avoided having to answer those questions. We also made sure that the client got paid X, which was more than Y or Z.