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Home insurance executive summary

By Jay MacDonald ·
Friday, May 31, 2013
Posted: 6 am ET

Any fancy research study worthy of its footnotes these days begins with an executive summary, which, as the name implies, summarizes upfront the findings that follow. It's called an "executive" summary instead of what are arguably more appropriate titles because busy executives don't have time to wade through pages of wonk work to get to the point.

New Jersey Gov. Chris Christie, who no doubt has scanned his share of executive summaries over the years, figures it's exactly what his state's homeowners need to help them understand their home insurance.

Following in the wake of Superstorm Sandy, Christie signed a bill this month that would require home insurance companies to provide policyholders with a one-page executive summary. The summary would explain "notable coverages and exclusions under the policy" and must be "written in a simple, clear, understandable, and easily readable way." State insurance regulators were charged with establishing a timeline to implement the new law.

The executive summary idea arose from a December meeting of the New Jersey Assembly in which financial institutions and the state's insurance committee reviewed insurance snags that occurred following the freak October storm that devastated much of the Jersey shore. Issues that were identified included the fact that many homeowners simply did not understand the terms of their home insurance coverage.

"Understanding fully the insurance fine print can be among the most daunting tasks consumers face," said democratic state Assemblywoman Linda Stender. "Insurance companies need to provide clearer and better explanations of their policies, and this is a pro-consumer step in that direction."

When insurers expressed concern that the simplified contents of such an executive summary might expose them to even more litigation, the legislators amended the bill to require the summaries to be clearly labeled as a guide only and not the policy itself.

Christie has a point. Have you actually read your home insurance policy? Probably not. At best, you may have scanned the contract's checklist of coverages, which can often prompt more questions than answers. Even the declaration page, if you have one, can be stubbornly opaque.

That said, the unusual circumstances of is-it-a-hurricane-or-isn't-it Superstorm Sandy turned out to be a perfect storm of consumer confusion, testing the bandwidth of even the policy-savvy.

What's your read? Should all home insurance policies come with an executive summary?

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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