Insurance Policy Wording and the Rule That Punishes the Drafter

Some states also legislate the reading level

New York requires that certain policies be written in a clear and coherent manner, using words with common and everyday meanings to make them readable. The statute sets a measurable floor: a minimum score of forty-five on the Flesch reading ease test, or an equivalent score on a comparable test. It also requires printing in not less than ten point type, with at least one point of leading, excepting specification pages, schedules, tables, and applications.²

The statute names what it covers. Among the categories are forms requiring approval under specified sections and comprehensive health services plans. The list also covers homeowner's and personal property insurance for dwellings of four units or fewer, and motor vehicle insurance for personal use where the policyholder is a natural person.²

Two things follow for anyone drafting or reviewing a policy in that market. Readability is a filing requirement rather than a preference. And the test is arithmetic, so a draft either passes it or does not, and the answer is available before the form is filed.

The four faults that create uncertainty

Each of these is visible in the document, and none of them requires a view about coverage. Three of the four can be found by a search rather than by a reading.

The first is a defined term used before it is defined, or used in a sense the definitions section does not support. A policy is a system of defined terms, and a term that drifts between the insuring agreement and an endorsement has created exactly the uncertainty the rule of interpretation punishes.

The second is an exclusion that overlaps another exclusion without saying so. Two provisions reaching the same conduct in different words invite an argument that they mean different things, because a reader assumes different words were chosen for a reason.

The third is a modifier whose scope is unclear, which is the fault that reached a federal appeal over one comma. A phrase qualifying the last item in a list, or all of them, is the ambiguity that reaches appellate courts most often, and it is settled at drafting by punctuation or by restructuring the sentence.

The fourth is an endorsement that amends language the base form no longer contains. Forms are revised on different cycles, and an endorsement written against the previous revision produces a policy that refers to a clause nobody can find.

What an editor can do about all four

Every one of them is checkable without deciding a coverage question, and every one produces a list rather than an opinion.

An editor can list every defined term, every place it appears, and every place a definition-like phrase appears without being one. That inventory is the single most useful document in a policy review, and it is copy editing work as Editors Canada describes it, covering correctness, accuracy, consistency, and completeness.³

An editor can map exclusions against each other and flag pairs that describe overlapping conduct. An editor can mark every sentence that reads two ways and show both readings. And an editor can check every cross-reference in an endorsement against the current base form.

Editors Canada's Professional Editorial Standards ask that queries, memos, and author letters be clear, tactful, succinct, and actionable, and that changes be made while maintaining a consistent voice, tone, and register without altering intended meaning.⁴ On a policy the second half of that is not a stylistic aspiration. Altering intended meaning is the failure mode.

Where this stops being editing

Whether a clause is enforceable, whether an exclusion is valid in a given state, whether a form satisfies a regulator, and what a policy covers are questions for the insurer's counsel and its compliance function. An editor who answered one would be practicing law, and an ambiguity resolved by an editor's guess is worse than one flagged and left.

Everything a client sends is treated in confidence, including draft forms, filings, and correspondence with a regulator. EditFast works on insurance documents and on contracts and agreements at the level of wording, definition, and consistency, and reports what reads two ways.

The economics favor doing this early. A sentence that can be read two ways costs an afternoon to fix at drafting. Read the other way by a court years later, it costs whatever the claim is worth.