Because your insurance policy should cover damages from natural calamities that could devastate your property, you want to make sure the policy you apply for meets all your needs. Unfortunately, some property owners find a policy is too confusing to understand but sign it anyway, only to find later that the policy did not cover certain kinds of damage.
Confusing insurance policies are a common problem for policyholders. Many insurance policies contain lengthy sentences and many pages outlining risks and perils but also exceptions to coverage that many people tend to miss. As Forbes explains, the main reason for such complicated policies is so they can stand up in court.
How insurance law affects policies
The idea behind many insurance laws is to protect the rights of policyholders. The addition of insurance laws and regulations has caused insurance companies to revise their contracts to comply with these laws. And if a court hands down a landmark case concerning insurance law, insurers must update their contracts to follow the ruling. The result is that insurance contracts become longer and more complicated as they evolve to address new developments in insurance law.
The language of insurance contracts
Another issue is the complexity of the terms in a contract. Since insurance companies want their policies to stand up in court if challenged, insurers will use very specific terms and legal explanations that address matters of law. Unfortunately, if you do not have a background in law, these terms might confuse you, making it hard for you to understand exactly what your policy says.
Reading an insurance contract
In spite of the density and complexity of many insurance contracts, you should still understand what you are agreeing to when you purchase a policy. You might seek out professional help to assist you in reading a policy document. As you go over an insurance contract, you might notice uppercase words in the contract. These are likely words that have a very specific meaning in the contract and bear special attention.
Sometimes an insurer will make a contract confusing on purpose so they have loopholes to deny coverage. An attorney might alert you to this problem before you sign a policy. In the event an insurance company does deny you coverage using unclear jargon, you might still have a case that your insurer negotiated with you in bad faith.