96% of homeowners have it and they spend an average of $868 per year for it. Yet, a new survey shows that they don’t understand what they bought. A 2007 National Association of Insurance Commissioners (NAIC) survey revealed that one-third to one-half of homeowners’ insurance policyholders were misinformed about what perils are covered by their policies and how much they might receive if they made a claim.

We shouldn’t be surprised. Policies are lengthy legal documents constructed with boilerplate language that is then modified with numerous notices and endorsements. Even motivated readers who put on their reading glasses are unlikely to be able to relate the significance of the policy provisions to real-world events. Consider the term "actual cash value." Shouldn’t we admit that it sounds like a good thing, not a bad thing? To real people (not lawyers), it sounds like what it costs to buy the item, not its depreciated value.

What’s more, insurers have practically trained customers to be passive consumers. Many policyholders don’t even read the policy because they don’t expect to be able to understand it. So, customers coast along in blissful ignorance until they hit the rare event of a claim and then they understand the significance of what they did or did not have covered. Consider your own circle of family and friends; typically, they will have only one or two homeowners’ claims in a lifetime. As an industry, does it really make sense for property-casualty insurers to rely on ignorance to stave off customer dissatisfaction?

What would change the scenario? A sales process laden with plain English explanations and reality-based modeling would enable homeowners to understand what they are buying. Basic technology such as on-line calculators and scenario builders would help homeowners customize their policies to the risks and characteristics of their location, building type and weather conditions. In addition, examples could help them relate risks to circumstances that they could envision. Homeowners might even be inclined to be less "penny wise and pound foolish" and pay more for better coverage.

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I recently heard a radio ad exhorting everyone to make sure that their real estate agent is a “Realtor.” I wondered what that meant—would a realtor have a special license and how did it differ from the terms “agent” and “broker”? Then, a few days later, I came across an article promoting the use of a “Certified Buyer Representative.” As though buying or selling a home isn’t already filled with aggravation, apparently there are at least 8 designations of types of real estate professionals: CBR, C-CREC, CEBA, CRP, CBA, CRS, ABR and GRI. You can explore this alphabet soup yourself at www.CBRsource.com. What might the difference be between a CBR: Certified Buyer’s Representative and a CEBA: Certified Exclusive Buyers’ Agent? Don’t look to me for the answer, I’m still confused.

Isn’t this a classic case of industry self-absorption? Who has the time or inclination to find out what each of these is and when to use one or another? Even doctors have the good sense to name their specialties in a recognizable way (orthopedist, ophthalmologist, cardiologist, etc.). Industries that don’t look at themselves from the customer’s perspective risk looking like they are trying to dupe the customer. The idea of a buyer’s agent might be a very solid one but at the moment I’m too busy to find out because I’m looking for a headache specialist.

The U.S. Congress is holding hearings today to shame the CEOs of major credit card companies into disclosing their fees and interest rates in clearer language and perhaps even changing their policies for imposing them. Certainly, they can’t be surprised by this since most Cardholder Agreements are multi-panel scrolls which unfurl to reveal pages of tiny, light grey type bearing the title, “Important Changes to Your Retail Installment Credit Agreement.” Given the title, “Important,” you might try to read it and you’ll find this:

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Apparently, as they say, “all that glitters is not gold.” Last week, I saw a television ad from Zales, the largest specialty jewelry retailer. It consisted of many pieces of attractive diamond jewelry, each described with a full price and then a markedly lower current price for Valentine’s Day. Clearly, the point of the ad was the fantastic pricing. So, I was amazed to see fine print at the bottom of the screen which said: “Original prices may not have resulted in actual sales.”

What does that mean? I think it means that the original price they quoted was a fiction–no one actually ever bought the jewelry at the higher price. They simply quoted a high number so that they current price sounded dramatically lower.

Really, duping the lovestruck seems unnecessarily cruel.

Jane Brody wrote an article in the January 30, 2007 issue of The New York Times discussing the topic of health literacy. Although she mentions that “health illiteracy” is pervasive because it affects many strata of our society, the misinterpretations she cites will not be rectified by plain language and point to a more fundamental problem. One example—“Medication Should Be Taken With Plenty of Water”—was misinterpreted to mean “Don’t take when wet” and “Don’t drink hot water.” These misinterpretations point to general illiteracy, not health illiteracy. Unfortunately, I suspect that the people who were confused by such simple instructions are barely able to function in any aspect of their lives. They must require assistance to travel, to drive, to work, to dine out, etc.

My concern is that by muddying the issues of general illiteracy and health illiteracy, the medical community will find that solutions are unattainable and give up too easily. If we set a standard of communication for health topics that aims too low, many projects will never make it to the marketplace because the standard will be unrealistic. If someone can’t understand the words, “plenty of water,” it is absurd to think that they will ever understand a written explanation of “a 3% chance of death or serious injury from surgery.” However, many literate, well-educated people cannot understand medical consent forms and would benefit from plain language explanations and innovative information design techniques. The two topics—general illiteracy and health illiteracy—need to be disentangled because the solutions are not the same.

Am I the only person on Long Island who was motivated to read and understand the 16-page 2006 Annual Drinking Water Quality Report sent to my home? Unfortunately, I still can’t tell you what it said.

The frightening words, “arsenic,” “radon,” “molybdenum,” and “strontium 88,” certainly caught my attention, but I can’t tell you if my water has them and whether I should be worried about them. That’s because I would have to find my location within 35 Distribution Areas, and translate the low, high and average values for dozens of possible contaminants. This is a classic example of inundating people with data that yields no actual information. It’s presented on 16 pages of newsprint and literally looks like a sea of gray type. The only way to make this useful would be to customize the content so that it focused on the water supply for the location of my home and then wrote the conclusion in plain English.

If Best Buy or Circuit City were forced to display the instruction manuals next to their products in the stores, no one would ever buy another digital camera, plasma television or home theater. A classic example is the 147-page instruction manual that came with my newly purchased surround sound receiver. Once my eyes saw the manual, my ears no longer wanted surround sound.

Had I thumbed through the manual in the store, I would have seen the warning signs:

• 36 part names on the front panel; 14 more on the display and 19 more on the rear panel;
• dozens of illustrations that looked like plates of spaghetti (a preview of the many wires I would find shortly); and
• the coup de grace—a chapter titled, “Easy Set-up and Operation.”

Why is it that the words “easy” and “simple” are only present when the task at hand will be anything but?

Of course, the electronics retailers are not to blame. The manufacturers, specifically their engineers, are the ones who dream up the hundreds of features. Then the writers of the manuals make it worse. The manual I was reading seemed to be written for either a moron or a rocket scientist. One page had cartoon drawings of the receiver crying, melting and otherwise exhibiting human traits while the next talked about “connecting the pre-out terminals, the trigger-out terminals and the multi-zone terminals.” I can’t even say that this manual seemed to have been translated into English from another language. I think someone actually wrote it this way.

Since I had 146 pages to wade through, I didn’t appreciate the writer’s inability to get to the point. You tell me whether it was necessary to have these as three distinct steps, “Read instructions…,” “Retain instructions…,” and “Follow instructions…” At that point, the only one I wanted was “Burn instructions…”

Will I ever buy another piece of electronics—yes, but not from this company.