Shop At An Online Policy Market?

An insurance law professor recently pointed out that “Insurance is the one product where you can’t find out what you’re buying until you’ve bought it.”

He came up with the suggestion that all state insurance regulators follow an initiative of the Nevada Department of Insurance, according to a recent article in the Newark Star Ledger.

Rutgers University professor Jay Feinman pointed out that you can choose coverages and deductibles, but you can’t read the fine print in your insurance policy until after you have bought it.

Those who have been exposed to insurance law (and readers of this blog) know full well that, with insurance policies, the “the devil is in the details”.

Why not put policy forms online so that people can read them and understand what they are going to get before they buy a policy?

The professor suggests that a Nevada initiative should be adopted by all states to give people better understanding of their coverage.

According to him, the state of Nevada began publishing online the policy forms of 10 of the state’s largest home and auto insurance carriers.  These carriers do about 80% of the  home and auto business in Nevada.

We agree with Professor Feinman that making this material available to the public online is not likely to help too much in educating the public because policyholders are notorious for not reading their policies even after a triggering event occurs.

But, there are many consumer advocacy groups can and will provide consumers with easy-to-understand guides to compare rates and the coverages offered.

Although this present situation covers only auto and home policies, there is no reason why it can’t be expanded to cover ERISA disability, life, health and other types of insurance which are based upon standard types of insurance policy forms. 

As well as helping employees to understand what insurance protection they have, the employer could also benefit by having an easy-to-understand comparative guide covering both benefits and cost.

These guides can be formulated by large employer associations as a service to their members.

Greater transparency – What a concept!



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