Insurance trends: plain language policies

Let’s be honest. Most people have signed an insurance contract without reading it through or really understanding what they’re signing. That’s because, for most people, boilerplate insurance policies packed with standard provisions can be very hard to understand. They’re long, confusing, and use jargon-y legalistic language that most people simply aren’t familiar with. Therefore, in many cases, customers end up with coverage that is very different than what they thought they were getting, simply because they didn’t properly understand their contract and policy. 

In the past, that wasn’t a major concern for insurers because customers didn’t have much choice in the matter. Complicated contracts were the modus operandi across the insurance industry, and the power was in the hands of the major insurance providers. Plus, customers had agents and middlemen to figure out the legalese and translate it for them, keeping their best interests in mind. However, in recent years things have changed.

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The benefits of using plain language in insurance policies

In the digital world, consumers are doing away with middlemen and agents and want to buy insurance directly, online. Yet when they do so, they lose their “translator” and need to understand the conditions of their contract and policy on their own. Insurers have to transfer their policies into plain language that the average consumer can understand to meet their needs. 

Customer expectations have also changed as they access more services online. They now expect their interaction with their insurance providers to be as clear and straightforward as it is with other online service providers—they aren’t willing to settle for less. That includes, among other things, the language that insurers use. And increasingly, the law is on their side. In a recent case in the UK, the Court reiterated the importance of clear, unambiguous language in contract construction, ruling against an insurer who did not meet this standard. The case is an indication that courts are placing the burden of writing clearly on the drafter and requiring insurers to write in unambiguous language, especially surrounding bespoke clauses. 

In addition, the insurance industry is also no longer the sole domain of the industry giants. Innovative “insurtech” companies with roots in tech are disrupting the insurance industry and bringing the UX principles of the tech world to insurance. In order to remain competitive with the new players, the established insurers have no choice but to adopt a more customer-centric approach, including in the language they use. 

How to write effective and clear insurance policies

In UX writing in general, and insurance policies in particular, it can be helpful to imagine that you’re explaining the topic—in this case, the insurance policy or contract—to someone you know, like your neighbor, a friend, or even your mom. Jot a thought down and then read it out loud, imagining that person sitting in front of you. Will she understand what you said? Will it make her feel like you’re trying to be helpful and address her needs? If not, better try again. It can also be a good idea to use prototyping to test your language with users and tweak wording that they perceive as ambiguous or unclear. 

Some principles of writing clear insurance policies are not unique to the insurance industry—they’re simply best practices for UX writing in general. For example, readability experts recommend that sentences should be no longer than 20 words. That’s because longer sentences overload the reader with information and usually do not organize information in a clear and effective way. It’s better to separate ideas into shorter sentences and use transitional words to show their relationship. In general, you should strive to reduce complexity. More isn’t usually better, and if a sentence isn’t giving users important information or helping them understand how to complete an action, it’s better to leave it out.  

When writing a policy or contract, clearly list what is covered and make sure to explain what is not. If something isn’t covered, make it easy for the customer to purchase additional coverage for that item—in addition to supporting the user experience, it’s a great sales strategy. Stay away from general terms and give customers examples that illustrate what is included in a category. If customers need to provide a list of their belongings in the contract, make helpful suggestions and prompt them so that they won’t forget a critical item. 

Last but not least, stay away from industry jargon. Use words that people who aren’t part of the insurance or legal industry will understand. If you have to use a legal or industry term, make sure to explain what it means in plain language. 

The importance of plain language in creating a positive customer experience

Trust is a major factor in insurance. Customers are willing to invest in their policies if they have confidence that the insurance company will be there for them when they need it. Transparency is central to trust, but it’s hard to create transparency if the customer can’t understand the terms and conditions being offered. 

And customers today are empowered. They do online research and compare the offerings of various providers before making a purchase. They have more options available than ever before, and they know it. They expect interactions to be easy and straightforward, and when they aren’t, they don’t stick around. If they don’t understand what a given provider is offering or feel like the provider isn’t helpful, they’ll shop around for a provider who is.  

Insurance industry trends—companies that are doing it right

The insurance upstart Lemonade has been a trailblazer in a brilliant use of plain language. They offer what they call Policy 2.0—a radically simplified insurance policy. It’s essentially an open-source contract that anyone can contribute to on Github—sort of like a contract wiki. The contract starts off with a “squeezed” version, which is a quick overview of the contract for people who don’t have the time to read all of the details. It uses plain language that sounds almost conversational, for example: 

Who’s covered?

This policy covers Jane Doe. You can add more people as long as they permanently live at 5 Crosby Street.

Against what?

We protect you against theft, vandalism, fire, smoke, burst pipes, appliance leaks, and damage others may accuse you of causing. There are important limitations, though, so please read on.

For how much?

We provide coverage up to a certain limit. Here is a quick overview of the limits you chose (and can change):

• Damage or theft of your stuff, up to $10,000 in total, and $2,500 per item.
• Temporary living expenses if your home becomes unlivable, up to $2,500.
• Damage to other people, up to $100,000

These amounts indicate the maximum we will reimburse you, in total, per year - even if the losses you suffer are larger.

Plain language, like Lemonade uses, sounds like a conversation with a friend. It’s very easy to understand, even if you don’t have a background in law or insurance. Not only that, it is structured to be helpful, drawing the readers' attention to the fact that there are limitations, so the reader doesn’t miss them. 

This type of plain language makes it easy for the reader to understand what’s included in the policy and what isn’t. It also opens opportunities for upsell—by clearly explaining to readers what is covered, they also understand what isn’t and may be interested in purchasing additional coverage. Again, another example from Lemonade: 

So take a minute to imagine the stuff belonging to everyone on the policy going up in flames tomorrow (ouch). Remember to include everyone's clothes, furniture, jewelry, cameras, laptops, and phones. If $10,000 isn’t enough to cover everything, please increase your total coverage. And if you own any valuable items worth more than $2,500, be sure to add them to your policy, so they’re covered for their full amount.

[.emph]By using plain language, the company is actually able to sell more. It can convince users to invest more in their insurance coverage while still coming across as helpful and focused on customer needs, which means happier, more loyal customers who buy more.[.emph]

It’s time to tell it like it is

The days when convoluted legal language made a company more prestigious are long gone, and the era of the middleman is also coming to an end. Consumers today want to purchase insurance directly online and expect their insurers to make it easy for them to understand exactly what they’re getting and what else they might need. Not only that, court precedents like that in the UK are shifting the responsibility of making policies clear to the employers. Using plain, conversational language is the best way to avoid legal problems, build trust, and even encourage customers to spend more to expand their coverage.