United States Sen. Trent Lott (R-Miss.) has renewed his efforts to make homeowners’ insurance more understandable.
Lott last month introduced the Homeowners’ Insurance Noncoverage Disclosure Act, which would require insurance companies to list specifically what is not covered by the policy on the front page of the policy in simple language and large type.
The bill is similar to one Lott introduced last year, said Lee Youngblood, Lott’s spokesman. Many attempts to extend federal regulations to the insurance industry, which is largely regulated by the states, have failed in the past.
Lott has sued his insurance company, State Farm Fire and Casualty Co., over the insurer’s refusal to cover Hurricane Katrina damage to his home.
Lott’s experience with insurance after Hurricane Katrina prompted this and other initiatives to reform the insurance industry, Youngblood said.
“Sen. Lott learned some things about insurance he didn’t know before, and many Mississippians were forced to do the same thing,” Youngblood said. “He found out some things he was not comfortable with and would like to change.”
The goal of the bill is not to eliminate complex language in insurance, Youngblood said. It only seeks to put a clearer explanation of the small print in an easily accessible place for consumers.
“Legalese is part of our daily lives, especially when you’re talking about insurance, which is a contract,” Youngblood said. “But insurance is more than a contract. It’s a product purchased by consumers.”
“This is something Sen. Lott believes is very simple, very easy to do that could save a lot of heartache, legal disputes, time and anguish of trying to understand the policy.”
The bill would require the Federal Trade Commission to enforce the disclosure by expanding the reach of existing regulations to cover the home insurance policies, Youngblood said. The disclosure would include “all conditions, exclusions and other limitations” on the policy’s coverage, he said.
June Holmes, interim chief executive officer of the Property Casualty Insurers Association of America, said in a statement that Lott’s bill was unnecessary.