Bill
HB 3804
Illinois requires insurance policies to be written in clear, easily readable language for the average reader; the Director of Insurance will adopt rules to define and enforce this.
Status and timeline
- Introduced by Rep. Harry Benton (filed Feb 7, first reading Feb 18, 2025).
- Passed both chambers (House and Senate) in April–May 2025.
- Sent to and signed by the Governor on June 20, 2025.
- Became effective immediately on June 20, 2025.
Purpose
- Require insurance policies issued, amended, renewed, or delivered in Illinois to be written in language that is easily readable and understandable by a person of average intelligence and education, to improve consumer comprehension of insurance contracts.
Key provisions
- Adds new Section 143.5 to the Illinois Insurance Code (215 ILCS 5/143.5).
- General readability requirement: as of the statute’s effective date, insurance policies must be written in language “easily readable and understandable by a person of average intelligence and education.”
- Factors the Director of Insurance must consider when determining readability (at minimum):
1. Simplicity of sentence structure and shortness of sentences.
2. Use of commonly used and understood words.
3. Avoidance of legal (technical) terms.
4. Minimization of references to other sections or provisions of the contract.
5. Incorporation of definitional provisions in the body text of the policy or contract.
6. Any additional readability/understandability factors the Director may prescribe by rule.
- Empowers the Director of Insurance to adopt rules specifying additional factors or implementation details.
Who is affected
- Insurance companies authorized to do business in Illinois — responsible for drafting policy forms that meet the new readability standard.
- Policyholders and prospective consumers — likely to receive clearer, more understandable policy documents.
- Insurance regulators (Director of Insurance) — charged with implementing the standard, reviewing policy forms, and prescribing rules.
- Agents, brokers, and policy form reviewers — may need to revise materials and communications to align with the statute and any rules.
Practical impact and considerations
- Anticipated effects include revisions to policy form language, potential administrative review of forms for compliance, and improved consumer comprehension.
- The statute sets a subjective readability standard (“person of average intelligence and education”) but does not specify an enforcement mechanism, penalty schema, or objective readability test (e.g., Flesch scores); the Director’s rulemaking will likely clarify compliance expectations and procedures.
- No dollar amounts or transitional deadlines are provided in the text — insurers should monitor forthcoming administrative rules from the Director of Insurance.
Compiled from official sources — confirm details with the bill’s official record.
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