Arkansas Administrative Code › Agency 054 - Arkansas Insurance Department › Rule 054.00.92-002 - Personal Lines Property and Casualty Language Simplification

Current through Register Vol. 49, No. 6, June, 2024
SECTION 1. PURPOSE
The purpose of this Rule is to establish minimum language and
			 format standards to make property and casualty insurance policies for personal
			 lines easier to read. This Rule is not intended to increase the risk assumed
			 under policies subject to it, nor is it intended to impede flexibility and
			 innovation in the development of policy forms or content.
SECTION 2. AUTHORITY
The Rule is issued pursuant to the authority vested in the
			 Commissioner by Ark. Code Ann. §§
								23-61-108,
			 23-80-305,
			 25-15-201, et
			 seq., and other applicable provisions of Arkansas law.
SECTION 3. APPLICABILITY AND SCOPE
This Rule shall apply to all personal lines property and casualty
			 insurance policies delivered or issued for delivery in this State by or on
			 behalf of any insurer licensed in this State as defined in this Rule. For the
			 purpose of this Rule "personal lines policies" are (1) solely used to provide
			 homeowners insurance, fire and extended coverage insurance, dwelling fire
			 insurance on one to four family units, or individual fire insurance on dwelling
			 contents; or (2) principally used to provide primary-insurance on private
			 passenger non-fleet automobiles individually owned and used for personal and
			 family needs. For purposes of this Regulation, with respect to fire and
			 extended coverage insurance, "personal lines policies" do not include policies
			 issued using commercial lines forms and insuring the lessor's risk.
SECTION 4. EFFECTIVE DATE
The effective date of this Rule is January 1, 1992.
SECTION 5. STANDARDS
To comply with Ark. Code Ann. §
								23-80-306,
			 policies covered by Sections 3 an4 4 of this Rule shall meet the following
			 standards:
A. The policy shall include
		  a table of contents of important provisions.
B. Each section shall be self-contained and
		  independent. However, general provisions applicable to more than one section
		  may be included in a common section.
C. The policy, except for declarations pages,
		  schedules, and tables, shall be printed in not less than 8 point type, one
		  point leaded.
D. The policy shall
		  be printed in a legible type style with adequate contrast between ink and
		  paper. Captions, headings and spacing shall be used to increase overall
		  legibility.
E. The policy shall be
		  written in every day, conversational language, consistent with its standing as
		  a contract. Short sentences and a personal style shall be used wherever
		  possible.
F. Technical terms and
		  words with special meaning shall be avoided wherever possible.
G. The policy text shall achieve a minimum
		  score of 40 on the Flesch Reading Ease Test or an equivalent score on'any other
		  comparable test or a lower score on either if the Commissioner finds the policy
		  reasonably easy to read. For purposes of this Section, a Flesch Reading Ease
		  Test shall be scored by the following method;
1. For a policy containing 10,000 words or
		  less of text, the entire policy shall be analyzed. For a policy containing more
		  than 10,000 words, the readability of two 100-word samples per page may be
		  analyzed instead. The samples shall be separated by at least 20 printed
		  lines.
2. The total number of words
		  in the text or sample shall be divided by the total number of sentences. The
		  figure obtained shall be multiplied by 1.015.
3. The total number of syllables in the text
		  or sample shall be divided by the total number of words. The figure obtained
		  shall be multiplied by 84.6.
4. The
		  sum of the figures computed under subsections (2) and (3) subtracted from
		  206.835 equals the Flesch Reading Ease Test score.
5. For purposes of this Section, the
		  following procedures shall be used:
(A) A
		  contraction, hyphenated word, numbers, and letters, when separated by spaces,
		  shall be counted as one word;
(B) A
		  unit of text ending with a period, semicolon, or colon shall be counted as a
		  sentence;
(C) A syllable means a
		  unit of spoken language consisting of one or more letters of a word as divided
		  by an accepted dictionary. Where the dictionary shows two or more equally
		  acceptable pronunciations of a word, the pronunciation containing fewer
		  syllables may be used; and
(D) At
		  the option of the insurer, any form made a part of the policy may be scored
		  separately or as part of the policy.
6. The term "text" as used in this Section
		  includes.all printed matter except: the name and address of the insurer; the
		  name, number, or title of the policy or form; the table of contents or index;
		  headings and captions; and declarations pages, schedules, or tables.