A follow-up to my post, Homeowners Cannot Understand Their Policy Even When They Read It, is important because the topic cannot be overstated. That post was based on a research paper showing empirical evidence that most homeowners cannot understand their policy even after reading it. The 2025 Summer meeting of the NAIC Consumer Liaison Committee offered a rare moment of honesty about this topic and this truth.
Brenda Cude from the University of Georgia laid the foundation by explaining why the traditional advice to “read your policy” rings hollow. Policies are bloated, disorganized, and nearly impossible for the average consumer to navigate. Many homeowners cannot even locate their full policy and endorsements, much less piece together a coherent understanding of their coverage. Her research shows something even more alarming: giving consumers actual policy language does not meaningfully improve their understanding of what is insured and what is not. That should stop anybody who has said a policyholder must read their policy, projecting that it will make them understand it. We are telling people to read documents that weren’t written for them and don’t help them, even when they do read them.
Amy Bach of United Policyholders followed up by describing how homeowners policies have drifted away from standardized forms into a maze of customized, insurer-specific documents. The result is predictable confusion. Deductibles change shape and trigger in ways consumers cannot follow. Coverage limits, exclusions, and important protections like extended replacement cost, code upgrade coverage, and temporary rent coverage are often poorly explained or buried in endorsements. Bach highlighted that consumers are not just confused about these terms, but are suffering real consequences when losses occur. Litigation is rising over issues such as water damage limits, mold exclusions, anti-matching provisions, and disputes over actual cash value versus replacement cost. None of this is happening because homeowners are careless. It is happening because the policies are impenetrable to them when read, and insurers are adding complexity faster than consumers can keep up.
Bach’s message is one every regulator, insurer, and agent should hear clearly: consumers need help before a loss as much as after one. They need guidance that is understandable, practical, and rooted in real-world loss scenarios. United Policyholders has long been the lone national voice urging consumers to get extended replacement cost coverage, sufficient additional living expense benefits, and realistic code upgrade protection. Bach’s comments at the NAIC meeting underscore why those recommendations matter more than ever. If a single outreach video about ill-fitting pajamas can educate consumers about underinsurance, imagine what could happen if agents took the time to walk their clients through these same concepts with clarity and intention.
Others at the meeting echoed the readability crisis from different angles. Brent Walker from the Coalition Against Insurance Fraud noted that consumer confusion can sow the seeds of fraudulent behavior when people discover after a loss that they were uninsured or underinsured. Dick Weber shared that he needed artificial intelligence just to decode his own 91-page homeowners policy and found that the AI summaries, while helpful, only emphasize how far the industry has drifted from plain communication. Erica Eversman raised concerns on the auto insurance side, where consumers focused solely on price often unknowingly buy policies allowing the use of imitation parts or containing appraisal clauses that are nearly impossible to find. Across the panel, a common thread emerged: people want to understand their coverage, but the insurance industry has not made that possible.
This is precisely why Bach’s remarks deserve special attention and why they carry an unspoken message to the agent community. Consumers cannot rely on policy language to tell them what they need to know. They need human guidance. They need agents who view their role as educators, not order-takers. They need conversations about limits, deductibles, endorsements, and exclusions, not fifteen-minute online quote sessions designed to shave dollars off a premium. If anything, the NAIC discussion should be a wake-up call for the industry to move away from the race-to-the-bottom sales culture and back toward meaningful, informed coverage counseling.
Insurance is not supposed to be a guessing game. It is supposed to be a safety net. When policies become unreadable, endorsements proliferate, and customization obscures instead of clarifies, agents become the last line of defense between a homeowner and financial ruin. The professionals selling the product need to do more than deliver a quote; they need to deliver understanding. The law should stop treating them with the duties of an order taker at McDonald’s, as discussed in Order Taker Status of Insurance Agents, and Insurance Agents Are More Than Your Waitress At Denny’s.
Thought For The Day
“The greatest problem with communication is we don’t listen to understand. We listen to reply.”
— Stephen R. Covey
