In recent years many consumers of insurance and consumer advocates have expressed concern over the growing complexity, length and lack of coherent organization of insurance policies, especially those policies usually referred to as personal lines insurance, i.e., homeowner and personal automobile policies. These people argue that the technical legal language and structure of most insurance policies on the market today make understanding of the policy by the average purchaser impossible. This lack of understanding by an individual of the terms of a policy, results in an inability to compare the coverages offered by different companies and to choose the precise coverages that a potential consumer believes he needs. It also results in frustration, resentment and consumer dissatisfaction when a person believes that he had a certain coverage at the time he purchases an insurance policy, but finds out after a loss that he misunderstood the policy terms.

One solution to this problem which has received considerable attention in the last few years is the proposal to revise all insurance policy forms eliminating technical legal jargon and reorganizing provisions in a logical, consistent order, thus creating a "Readable Policy." A number of states, companies and other organizations have begun to experiment along these lines. As a result, the 1976 Session of the Virginia General Assembly agreed to House Joint Resolution No. 72 which directed the Bureau of Insurance to study the feasibility of encouraging insurance companies to file and use readable policies on an experimental basis and to determine the desirability of mandating that all insurance policies sold in Virginia measure up to some standard of readability.

This report will summarize the actions taken by insurance companies to date to introduce readable policies and the actions taken by other state governments to encourage the production of such policies. It will then outline the problems and costs associated with the production of readable policies and make recommendations for appropriate legislative action.