The only thing that remains constant over time is change. All forms of insurance policies have to deal with change. Most of them have to deal with how coverage is provided, including responding to developments from significant court cases and changes needed by parties covered by policies. But now, in the U.S., policy forms are facing changes in format and language and these are reflected by actions in various U.S. states. Specifically, different states are providing rules and laws regarding policies being offered in an electronic format and/or in other languages, typically Spanish.
Increasingly, the world is decreasing the use of paper in favor of electronic documents. This change results in greater accessibility, affordability and portability. This change is also motivated by a higher concern to be “green” by reducing use of resources and waste (no discarded paper).
So far, states that allow insurance companies to provide policies electronically must comply with provisions such as the following:
- Insurer must make policies (as well as endorsements and promotional materials) in popular computer formats
- Insurer must exclude any data that makes it possible to identify a policyholder
- The policyholder must be notified when materials are available on-line
- The materials must be accessible throughout the time the information is in effect
- Such materials must be in a format that is approved by a given state
- Policyholders must have a free method of printing such materials
With regard to providing forms in a different language, states again take the lead in setting parameters. The incentive for using policies in other languages is spurred by a desire to offer forms that are more readily understood. Those with little or no proficiency in English are at a serious disadvantage with policies that only appear in that language. Having a policy, as well as endorsements, brochures, etc., available in another language greatly aids the ability to evaluate different coverage options, buy insurance and understand loss situations.
States do have to deal with a particularly important and related issue. How are such policies handled when a loss occurs? Policy wording in English may have significantly different meanings when translated and issued in other languages. Many terms and phrases have special meanings that are recognized by courts. Translated insurance form language may include significantly different interpretations.
For the time being, states and courts handle the above situation by defaulting on the use of the original, English version of a given form when they are subject to claims or lawsuits. While this may be confusing, this combined treatment allows non-English speaking policyholders to have a better understanding of their coverage, but still make them subject to the same handling in the courts as is faced by English-speaking policyholders.
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