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Clarity Before Crisis: Designing Legible Emergency Powers in Financial Regulation

This Essay responds to Samer Saffarini’s argument that post-Loper Bright judicial scrutiny can serve as a necessary check on regulatory overreach in financial crises. While that view is intuitively appealing, this Essay contends that it places too much weight on courts and too little on Congress. Emergency powers in financial regulation are often at their most consequential when they are least constrained—and judicial review, though valuable, is no substitute for statutory design. Drawing on institutional theory and recent crises, the Essay argues that Congress should enact “legible emergency powers”: frameworks that define factual triggers, constrain the scope of agency tools, and require transparency from the moment action begins. It then extends the conversation beyond federal law, outlining complementary mechanisms—state-based and private—that may serve as failsafes when federal intervention falters. In the end, the Essay offers a design-based model for emergency governance: one that enables swift action without sacrificing legitimacy and clarity without surrendering capacity.

Introduction

For the better part of a century, the American administrative state’s power expanded largely unchecked. Agencies spent decades extending their reach “to solve the Nation’s expanding problems,” developing their own forms of quasi-legal decision-making across “thousands of orders, opinions, statements, and instructions.”1 1.Ginsburg, Feldman & Bress v. Fed. Energy Admin., 591 F.2d 717, 719 (D.C. Cir. 1978).Show More But the old consensus—under which regulation was presumed automatically wise—has eroded.2 2.See, e.g., Ezra Klein & Derek Thompson, Abundance 8 (2025).Show More Today, concern over regulation’s stifling effects on innovation and production has reshaped both political culture and judicial doctrine.3 3.Id.Show More The political culture, for one, is increasingly less willing to defer to expert insistence that a given rule is “necessary.”4 4.See, e.g., Jason Scott Johnston, Restoring Objectivity and Balance to Regulatory Science: A Comment on Dudley and Peacock, 24 Sup. Ct. Econ. Rev. 101, 102 (2016) (discussing the problem of the “Scientist King”—an agency expert who is “confident that [their] expert knowledge of the evidence makes [them] the best judge of the policy based on that evidence” (emphasis added)); Cary Funk, Key Findings About Americans’ Confidence in Science and Their Views on Scientists’ Role in Society, Pew Rsch. Ctr. (Feb. 12, 2020), https://www.pewresearch.org/short-reads/2020/02/12/key-findings-about-americans-confide‌nce-in-science-and-their-views-on-scientists-role-in-society/ [https://perma.cc/6LTH-7A‌QS].Show More Courts, too, are less willing to defer to an agency’s interpretation of a statute it administers. In Loper Bright Enterprises v. Raimondo, for example, the Supreme Court held that “courts need not and under the [Administrative Procedure Act] may not defer to an agency interpretation of the law simply because a statute is ambiguous.”5 5.144 S. Ct. 2244, 2273 (2024).Show More

In the realm of financial regulation, the trouble is that laws are often at their most consequential when they are least precise. Indeed, in moments of crisis, agencies like the Federal Reserve (“Fed”) and the Federal Deposit Insurance Corporation (“FDIC”) turn to statutory provisions drafted for speed and flexibility—emergency authorities designed to prevent collapse before Congress can act. These powers are often vague by design: words like “unusual and exigent”6 6.Federal Reserve Act § 13(3)(A), 12 U.S.C. § 343(3)(A).Show More or “serious adverse effects”7 7.12 U.S.C. § 1823(c)(4)(G).Show More substitute for clear triggers or hard constraints. And when invoked, these provisions can shift trillions of dollars, shape market expectations, and redefine the balance of power between the public and private sectors.

For decades, courts treated this ambiguity with deference. But in Loper Bright, the Court signaled that this era was over. Instead, a new era—one characterized by skepticism toward regulatory discretion, particularly in high-stakes domains like finance—was to begin. Some commentators have welcomed this shift. A recent piece by Samer R. Saffarini in the Virginia Law Review Online argues that stronger judicial review of banking and financial regulators will deter the misuse of emergency powers and reduce the long-term risk of financial instability.8 8.Samer R. Saffarini, Note, Judicial Review of Emergency Powers in Banking and Financial Regulation, 111 Va. L. Rev. Online 134, 164 (2025).Show More As the theory goes, discouraging agencies’ impulse to “cry wolf” will force them to act more cautiously, preserving market discipline and insulating the economy from moral hazard.9 9.Id.Show More

But while concerns about regulatory overreach are well taken, this new regime presents issues of its own. Courts are not designed to govern emergencies in real time, nor are they well-positioned to second-guess the economic judgments of financial regulators under stress.10 10.In re Abbott, 954 F.3d 772, 801 (5th Cir. 2020) (Dennis, J., dissenting) (explaining that “courts must not act as super-executives in an emergency”).Show More Relying on judicial veto power alone to discipline emergency action risks producing the opposite of what critics intend: not deliberation, but hesitation; not modesty, but paralysis. In a post-Chevron world, the legal system must offer more than skepticism.

This Essay responds to Saffarini by arguing that financial emergency powers should be restructured ex ante for legibility: statutes should define the factual triggers, scope, and duration of emergency interventions before crisis arrives. Rather than relying on courts to filter good uses from bad, Congress should clarify upfront when and how regulators may act under conditions of financial stress. Legible emergency powers reduce moral hazard, bolster accountability, and enable swift action that is both effective and democratically authorized. They advance both the long-standing rule-of-law goal of checking discretionary power and the modern institutional goal of building a state capable of responding to real systemic threats.

This Essay proceeds in four parts. Part I describes how emergency provisions in financial law—particularly § 13(3) of the Federal Reserve Act and the systemic risk exception to the Federal Deposit Insurance Act’s least-cost resolution rule—enable regulators to act quickly in times of stress, but often without clear legal or factual constraints. It argues that the core problem is not emergency power itself, but the lack of ex ante statutory design to structure its use. Part II engages with Saffarini’s argument that judicial review, especially in the wake of Loper Bright, offers a sufficient check on regulatory overreach. While judicial scrutiny may help deter opportunistic agency action, this Part contends that courts alone cannot reliably assess crisis conditions in real time and are poorly positioned to serve as gatekeepers during moments of economic uncertainty. Part III outlines a model of “legible emergency powers,” in which Congress defines emergency conditions, permissible actions, and accountability mechanisms in advance. This structure enables fast and legitimate regulatory action while preserving both democratic oversight and market discipline. Part IV, meanwhile, outlines possible alternatives to federal regulatory action that may just as effectively aid in financial crisis management. In the end, the Essay argues that clarity before crisis—rather than discretion policed after the fact—offers the soundest foundation for emergency financial governance.

  1.  Ginsburg, Feldman & Bress v. Fed. Energy Admin., 591 F.2d 717, 719 (D.C. Cir. 1978). ↑
  2.  See, e.g., Ezra Klein
    &

    Derek Thompson, Abundance

    8

    (2025). ↑

  3.  Id. ↑
  4.  See, e.g., Jason Scott Johnston, Restoring Objectivity and Balance to Regulatory Science: A Comment on Dudley and Peacock, 24 Sup. Ct. Econ. Rev. 101, 102 (2016) (discussing the problem of the “Scientist King”—an agency expert who is “confident that [their] expert knowledge of the evidence makes [them] the best judge of the policy based on that evidence” (emphasis added)); Cary Funk, Key Findings About Americans’ Confidence in Science and Their Views on Scientists’ Role in Society, Pew Rsch. Ctr. (Feb. 12, 2020), https://www.pewresearch.org/short-reads/2020/02/12/key-findings-about-americans-confide‌nce-in-science-and-their-views-on-scientists-role-in-society/ [https://perma.cc/6LTH-7A‌QS]. ↑
  5.  144 S. Ct. 2244, 2273 (2024). ↑
  6.  Federal Reserve Act § 13(3)(A), 12 U.S.C. § 343(3)(A). ↑
  7.  12 U.S.C. § 1823(c)(4)(G). ↑
  8.  Samer R. Saffarini, Note, Judicial Review of Emergency Powers in Banking and Financial Regulation, 111 Va. L. Rev. Online 134, 164 (2025). ↑
  9.  Id. ↑

  10.  In re Abbott, 954 F.3d 772, 801 (5th Cir. 2020) (Dennis, J., dissenting) (explaining that “courts must not act as super-executives in an emergency”). ↑

Post-Conviction Channeling

­­­­People seeking to vacate their criminal convictions face bleak prospects. The reasons for this are myriad, from deferential standards of review to blanket bans on entire categories of claims. Yet lurking beneath these contributors is another, lesser-studied problem: when petitioners seek post-conviction relief, their cases are often decided by the same judges who presided over their trials or accepted their guilty pleas. That practice—which this Note calls “judge channeling”—is widespread, with most jurisdictions adopting it through either formal rules or informal practices. Proponents argue that judge channeling maximizes judicial economy because the trial judge’s familiarity with a case enables more efficient claim resolution. However, a robust body of social science research reveals a devastating trade-off: unconscious biases prevent judges from recognizing their own errors, hobbling petitioners seeking to challenge their convictions and vindicate meritorious claims. Prior scholarship has emphasized normative problems with judge channeling, but the analysis ends there. This Note intervenes in that narrow discourse by making two novel contributions to existing literature. First, it offers the first comprehensive study of state channeling procedures, explaining what they do and how they differ across jurisdictions. Second, this Note lays out alternative procedures that balance independent review with deliberative efficiency, and it considers which institutions are best poised to bring those procedures to life.

Introduction

In the popular imagination, the life cycle of a criminal case begins with an indictment and ends on appeal. For many defendants, however, exhaustion of direct appeal marks the beginning, not the end. There also exists a vast universe of post-conviction relief, including federal and state habeas corpus, writs of error, actual innocence petitions, and more. Those convicted at trial face a steep uphill battle, with only twelve percent of state convictions1 1.Nicole L. Waters, Anne Gallegos, James Green & Martha Rozsi, U.S. Dep’t of Just., Criminal Appeals in State Courts 1 (2015), https://bjs.ojp.gov/content/pub/pdf/casc.pdf [http‌s://perma.cc/2M64-RMA2].Show More and less than seven percent of federal convictions2 2.Just the Facts: U.S. Courts of Appeals, Admin. Off. of the U.S. Cts. tbl. 2 (Dec. 20, 2016), https://www.uscourts.gov/data-news/judiciary-news/2016/12/20/just-facts-us-courts-a‌ppeals [https://perma.cc/T9C7-5HW7].Show More being reversed on appeal. And if direct appeal is a hill, then post-conviction relief is a mountain: less than one percent of federal habeas petitions succeed,3 3.Nancy J. King & Joseph L. Hoffmann, Envisioning Post-Conviction Review for the Twenty-First Century, 78 Miss. L.J. 433, 437 (2008).Show More and state habeas presents similar challenges.4 4.Aggregated state habeas data is elusive, but studies focused on particular states and case types support this claim. See, e.g., David R. Dow & Jeffrey R. Newberry, Reversal Rates in Capital Cases in Texas, 2000–2020, 68 UCLA L. Rev. Discourse 2, 12 (2020) (finding a 5.6% success rate on state habeas review of death penalty cases in Texas); Mary K. McComb, Off. of the State Pub. Def., California’s Broken Death Penalty: It’s Time to Stop Tinkering with the Machinery of Death 58–59 (2021), https://www.ospd.ca.gov/wp-cont‌ent/uploads/2024/04/White-Paper.pdf [https://perma.cc/5HDM-UHHZ] (finding that the California Supreme Court has granted habeas relief in 4% of state capital cases since 1978).Show More

That dire prognosis makes sense on some level. After a defendant has pled guilty or lost at trial, and after they have benefitted from the rigors of direct appeal, post-conviction relief should be an uncommon remedy. Yet innocent people are convicted and imprisoned notwithstanding these safeguards,5 5.See Charles E. Loeffler, Jordan Hyatt & Greg Ridgeway, Measuring Self-Reported Wrongful Convictions Among Prisoners, 35 J. Quantitative Criminology 259, 259, 261, 276 (2019) (estimating that 6% of non-capital state offenders are factually innocent).Show More so there must be reasons other than guilt that explain their continued incarceration. Many of these reasons are procedural: people seeking habeas relief must navigate a tangled labyrinth of exhaustion requirements, procedural default rules, statutes of limitations, and bars to successive petitions—obstacles that also pervade state law.6 6.See infra Section I.A.Show More Layered atop these rules governing challenges to legally defective convictions are additional rules that make proving innocence exceedingly difficult for those afforded the full panoply of constitutional rights.7 7.See infra Section I.C. See generally Daniel S. Medwed, Barred: Why the Innocent Can’t Get Out of Prison (2022) (exploring procedural barriers to proving innocence after conviction).Show More

These procedural hurdles matter, but hiding in plain sight is another potent factor that shapes case outcomes: who decides the case. The availability of post-conviction relief is often determined by the same judge who presided over the petitioner’s trial or accepted their guilty plea, a phenomenon this Note calls “judge channeling.” The practice is popular, with most jurisdictions having statutes, judicial rules, and informal practices that permit, and in some cases require, the original trial judge to adjudicate petitions for post-conviction relief.8 8.See infra Section II.B; Appendix.Show More Defenders of judge channeling argue that the trial judge’s familiarity with the facts and issues animating a case allows them to dispose of cases more efficiently.9 9.See infra Section II.A.Show More This Note turns that argument on its head: familiarity with the underlying case is precisely the issue, creating blind spots and preventing the correction of judicial errors—sometimes grave and consequential ones.

Despite its popularity among legislatures and courts, judge channeling has long been a target of attack in the academic literature surrounding post-conviction procedure.10 10.See, e.g., Daniel S. Medwed, Up the River Without a Procedure: Innocent Prisoners and Newly Discovered Non-DNA Evidence in State Courts, 47 Ariz. L. Rev. 655, 679, 699–708 (2005) [hereinafter Medwed, Up the River Without a Procedure]; Daniel S. Medwed, California Dreaming? The Golden State’s Restless Approach to Newly Discovered Evidence of Innocence, 40 U.C. Davis L. Rev. 1437, 1472–75 (2007) [hereinafter Medwed, California Dreaming?]; Eli Paul Mazur, “I’m Innocent”: Addressing Freestanding Claims of Actual Innocence in State and Federal Courts, 25 N.C. Cent. L.J. 197, 230–34 (2003); Stephanie Roberts Hartung, Missing the Forest for the Trees: Federal Habeas Corpus and the Piecemeal Problem in Actual Innocence Cases, 10 Stan. J.C.R. & C.L. 55, 61–62 (2014); Joseph M. Bowman, Note, Processing a Motion Attacking Sentence Under Section 2255 of the Judicial Code, 111 U. Pa. L. Rev. 788, 800–02 (1963). As these titles suggest, most prior scholarship addresses innocence claims specifically rather than post-conviction relief more generally.Show More However, no piece of legal scholarship has made post-conviction judge assignment its exclusive or even primary focus. This Note fills that gap. While it leans on past normative critiques, it also makes two novel contributions of its own. The first contribution is descriptive, providing the first comprehensive survey of state post-conviction channeling procedures. The second contribution is prescriptive, introducing and comparing alternative ways of adjudicating post-conviction claims. Prior work begins and ends by pointing out a problem; this Note takes the additional steps of analyzing that problem in detail and offering workable solutions.

This Note proceeds in four parts. Part I broadly surveys post-conviction relief in the United States, paying special attention to habeas corpus, writs of error, and claims of actual innocence. Part II explores the phenomenon of post-conviction judge channeling, describing what it is, how it works across jurisdictions, and the general arguments marshaled in its favor. Part III then pivots from the descriptive to the normative, explaining how judge channeling entrenches bias, ossifies error, and deprives petitioners of meaningful review. Finally, Part IV considers alternative models of post-conviction adjudication that would better allow petitioners to vindicate meritorious claims without forfeiting judicial economy. In doing so, it explores what alternative regimes might look like and how reform might take place.

  1.  Nicole L. Waters, Anne Gallegos, James Green & Martha Rozsi, U.S. Dep’t of Just., Criminal Appeals in State Courts 1 (2015), https://bjs.ojp.gov/content/pub/pdf/casc.pdf [http‌s://perma.cc/2M64-RMA2]. ↑
  2.  Just the Facts: U.S. Courts of Appeals, Admin. Off. of the U.S. Cts. tbl. 2 (Dec. 20, 2016), https://www.uscourts.gov/data-news/judiciary-news/2016/12/20/just-facts-us-courts-a‌ppeals [https://perma.cc/T9C7-5HW7]. ↑
  3.  Nancy J. King & Joseph L. Hoffmann, Envisioning Post-Conviction Review for the Twenty-First Century, 78 Miss. L.J. 433, 437 (2008). ↑
  4.  Aggregated state habeas data is elusive, but studies focused on particular states and case types support this claim. See, e.g., David R. Dow & Jeffrey R. Newberry, Reversal Rates in Capital Cases in Texas, 2000–2020, 68 UCLA L. Rev. Discourse 2, 12 (2020) (finding a 5.6% success rate on state habeas review of death penalty cases in Texas); Mary K. McComb, Off. of the State Pub. Def., California’s Broken Death Penalty: It’s Time to Stop Tinkering with the Machinery of Death 58–59 (2021), https://www.ospd.ca.gov/wp-cont‌ent/uploads/2024/04/White-Paper.pdf [https://perma.cc/5HDM-UHHZ] (finding that the California Supreme Court has granted habeas relief in 4% of state capital cases since 1978). ↑
  5.  See Charles E. Loeffler, Jordan Hyatt & Greg Ridgeway, Measuring Self-Reported Wrongful Convictions Among Prisoners, 35 J. Quantitative Criminology 259, 259, 261, 276 (2019) (estimating that 6% of non-capital state offenders are factually innocent). ↑
  6.  See infra Section I.A. ↑
  7.  See infra Section I.C. See generally Daniel S. Medwed, Barred: Why the Innocent Can’t Get Out of Prison (2022) (exploring procedural barriers to proving innocence after conviction). ↑
  8.  See infra Section II.B; Appendix. ↑
  9.  See infra Section II.A. ↑

  10.  See, e.g., Daniel S. Medwed, Up the River Without a Procedure: Innocent Prisoners and Newly Discovered Non-DNA Evidence in State Courts, 47 Ariz. L. Rev. 655, 679, 699–708 (2005) [hereinafter Medwed, Up the River Without a Procedure]; Daniel S. Medwed, California Dreaming? The Golden State’s Restless Approach to Newly Discovered Evidence of Innocence, 40 U.C. Davis L. Rev. 1437, 1472–75 (2007) [hereinafter Medwed, California Dreaming?]; Eli Paul Mazur, “I’m Innocent”: Addressing Freestanding Claims of Actual Innocence in State and Federal Courts, 25 N.C. Cent. L.J. 197, 230–34 (2003); Stephanie Roberts Hartung, Missing the Forest for the Trees: Federal Habeas Corpus and the Piecemeal Problem in Actual Innocence Cases, 10 Stan. J.C.R. & C.L. 55, 61–62 (2014); Joseph M. Bowman, Note, Processing a Motion Attacking Sentence Under Section 2255 of the Judicial Code, 111 U. Pa. L. Rev. 788, 800–02 (1963). As these titles suggest, most prior scholarship addresses innocence claims specifically rather than post-conviction relief more generally. ↑

Read But Not Understood? An Empirical Analysis of Consumer Comprehension in Homeowners Insurance

Modern contract law assumes that consumers meaningfully assent to the standard forms that govern their daily lives. However, this assumption is widely regarded as a legal fiction for two key reasons: first, most consumers do not read standard forms, and second, even those who do often struggle to fully comprehend their terms and implications. Although the lack of consumer reading has been well documented through empirical research, consumers’ ability to comprehend standard-form contracts has received surprisingly little attention.

This Article addresses the latter issue by empirically examining whether providing excerpts from the dominant standard-form homeowners insurance policy improves consumer understanding of coverage. Through a series of survey-based experiments, we compare consumers’ general beliefs about homeowners insurance with their beliefs after reading key policy excerpts. Our main finding is that providing policy language only moderately improved consumer understanding in some scenarios, while affirmatively decreasing accuracy in others. We interpret these results as suggesting that respondents often struggle with partial reading or misinterpreting policy provisions, especially when policy language grants broad coverage that is later restricted by specific exclusions in the same section—a common structural feature of insurance policies.

These findings carry significant legal and regulatory implications. Even if most consumers do not read standard-form contracts, improving the readability and comprehensibility of standard-form terms can limit firms’ discretion in disputes, enhance regulatory oversight of unfair provisions, and empower markets to penalize firms relying on excessively one-sided terms. This Article argues that addressing these challenges is essential to fostering fairer and more effective consumer protections.

Introduction

A foundational premise of modern contract law is that consumers meaningfully assent to the boilerplate agreements that shape their daily lives.1 1.See Restatement of Consumer Conts. § 2 (A.L.I. 2024); Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law 12–13 (2013).Show More Yet this premise is widely rejected by academic commentators, who routinely assail it as nothing more than a legal fiction.2 2.See, e.g., Radin, supra note 1, at 14; Imre Stephen Szalai, The Prevalence of Consumer Arbitration Agreements by America’s Top Companies, 52 U.C. Davis L. Rev. Online 233, 236 (2019).Show More These academic critiques typically rely on two key empirical observations. The first, which is often called the no-reading problem, is that most consumers accept the contracts they ostensibly agree to without attempting to read or understand them.3 3.See, e.g., Oren Bar-Gill, Seduction by Plastic, 98 Nw. U. L. Rev. 1373, 1376–77 (2004); Omri Ben-Shahar & Carl E. Schneider, More Than You Wanted to Know: The Failure of Mandated Disclosure 77 (2014); Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 Stan. L. Rev. 211, 240–41 (1995).Show More The second key observation is that even diligent consumers who attempt to parse standard-form contracts often struggle to grasp their full implications.4 4.See, e.g., Tess Wilkinson-Ryan, A Psychological Account of Consent to Fine Print, 99 Iowa L. Rev. 1745, 1749 (2014); Melvin Aron Eisenberg, Comment, Text Anxiety, 59 S. Cal. L. Rev. 305, 309 (1986); Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77 N.Y.U. L. Rev. 429, 436 (2002).Show More We label this second critique the no-understanding problem.

Although the no-reading and no-understanding problems are closely related, they can lead to different conclusions about what legal and regulatory rules should apply to consumer contracts. For instance, consumers who do not even attempt to read their contracts can plausibly be deemed to be making a personal, entirely rational, choice.5 5.See, e.g., Avery Katz, Your Terms or Mine? The Duty to Read the Fine Print in Contracts, 21 RAND J. Econ. 518, 519–20 (1990); Omri Ben-Shahar, The Myth of the ‘Opportunity to Read’ in Contract Law, 5 Eur. Rev. Cont. L. 1, 2 (2009).Show More So framed, the judicial doctrine imposing a “duty to read” on consumers is coherent, albeit contestable.6 6.Charles L. Knapp, Is There a “Duty to Read”?, 66 Hastings L.J. 1083, 1085 (2015).Show More However, deeming consumers to have assented to contracts that they are predominantly unable to comprehend is not just unreasonable, but arguably illogical.7 7.See Uri Benoliel & Shmuel I. Becher, The Duty to Read the Unreadable, 60 B.C. L. Rev. 2255, 2277, 2282–83 (2019).Show More If even diligent consumers cannot understand the standard forms to which they supposedly assent, then the contract law foundations of modern consumer law become easier to supplement, or perhaps even replace, with more proactive legal and regulatory interventions.8 8.See Daniel Schwarcz, A Products Liability Theory for the Judicial Regulation of Insurance Policies, 48 Wm. & Mary L. Rev. 1389, 1435–36 (2007); Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1, 98 (2008); CFPB Warns Against Deception in Contract Fine Print, Consumer Fin. Prot. Bureau (June 4, 2024, at 10:01 ET), https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-against-decep‌tion-in-contract-fine-print/ [https://perma.cc/24BT-BPAC]; Susan Block-Lieb & Edward J. Janger, Fit for Its Ordinary Purpose: Implied Warranties and Common Law Duties for Consumer Finance Contracts, 59 Hou. L. Rev. 551, 599 (2022).Show More

More prosaically, the legal and regulatory measures available to counteract the no-reading and no-understanding problems in consumer contract law are often quite distinct. To encourage reading, regulations and judicial doctrines can push firms to draft shorter contracts,9 9.See Cynthia Adams, The Move Toward Using Plain Legal Language, 20 TYL, no. 4, Summer 2016, at 6, 6.Show More highlight or capitalize key terms,10 10.See, e.g., Yonathan A. Arbel & Andrew Toler, ALL-CAPS, 17 J. Empirical Legal Stud. 862, 863 (2020); David A. Hoffman, Relational Contracts of Adhesion, 85 U. Chi. L. Rev. 1395, 1428–31 (2018) (detailing examples of Kickstarter’s use of highlighting to improve comprehension).Show More make contracts more accessible,11 11.See Benedikt Schmitz & Charlotte Pavillon, Measuring Transparency in Consumer Contracts: The Usefulness of Readability Formulas Empirically Assessed, 9 J. Eur. Consumer & Mkt. L. 191, 191 (2020); George R. Milne & Mary J. Culnan, Strategies for Reducing Online Privacy Risks: Why Consumers Read (or Don’t Read) Online Privacy Notices, 18 J. Interactive Mktg., no. 3, Summer 2004, at 15, 25.Show More or require consumers to scroll through all terms or individually assent to specific terms before completing a transaction.12 12.Cf. Jonathan A. Obar & Anne Oeldorf-Hirsch, The Biggest Lie on the Internet: Ignoring the Privacy Policies and Terms of Service Policies of Social Networking Services, 23 Info. Commc’n & Soc’y 128, 140 (2020) (finding that research participants merely scrolled to accept the terms and conditions).Show More Conversely, improving consumer understanding of contracts requires a distinct set of potential legal and regulatory tools, including expanding and better enforcing quantitative and qualitative readability standards,13 13.See John Aloysius Cogan Jr., Readability, Contracts of Recurring Use, and the Problem of Ex Post Judicial Governance of Health Insurance Policies, 15 Roger Williams U. L. Rev. 93, 100 (2010); Michael A. Blasie, The Rise of Plain Language Laws, 76 U. Mia. L. Rev. 447, 481–84 (2022) [hereinafter Blasie, Rise of Plain Language Laws]; Michael A. Blasie, Regulating Plain Language, 2023 Wis. L. Rev. 687, 708–11 [hereinafter Blasie, Regulating Plain Language]; see also Michelle Boardman, Insuring Understanding: The Tested Language Defense, 95 Iowa L. Rev. 1075, 1077 (2010) (proposing a “tested language defense” that would allow insurers to defend against ambiguity claims by demonstrating that their policy language was empirically tested for consumer comprehension).Show More promoting technologies like “smart readers,”14 14.See Yonathan A. Arbel & Shmuel I. Becher, Contracts in the Age of Smart Readers, 90 Geo. Wash. L. Rev. 83, 115 (2022).Show More requiring effective disclosures,15 15.Cf. Omri Ben-Shahar & Adam Chilton, Simplification of Privacy Disclosures: An Experimental Test, 45 J. Legal Stud. S41, S61 (2016) (employing a survey-based methodology and finding that simplifying disclosures according to “best practices” had no significant effect on consumer comprehension of contract terms).Show More or using interpretive principles to incentivize firms to craft less ambiguous or technical terms.16 16.See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87, 120–21 n.147 (1989).Show More

Despite the differing theoretical and practical implications of the no-reading and no-understanding critiques of modern consumer contract law, there exists surprisingly limited empirical evidence focused exclusively on the latter question of how well consumers can understand typical consumer contracts when they affirmatively attempt to do so.17 17.See infra Part I; Lior Jacob Strahilevitz & Matthew B. Kugler, Is Privacy Policy Language Irrelevant to Consumers?, 45 J. Legal Stud. S69, S72–73 (2016); Uri Y. Hacohen, Amit Elazari & Talia Schwartz-Maor, A Penny for Their Creations—Apprising Users’ Value of Copyrights in Their Social Media Content, 36 Berkeley Tech. L.J. 511, 531 (2021); Tess Wilkinson-Ryan, The Perverse Consequences of Disclosing Standard Terms, 103 Corn. L. Rev. 117, 120 (2017).Show More What is more, the limited evidence that does exist suggests that the no-understanding critique may be overblown, at least when one focuses on the majority of consumers.18 18.See Omri Ben-Shahar & Lior Jacob Strahilevitz, Interpreting Contracts via Surveys and Experiments, 92 N.Y.U. L. Rev. 1753, 1787–88, 1791, 1794 (2017) (reporting the results of three surveys suggesting that, in the aggregate, surveyed consumers correctly alter their interpretation of contract terms that are redrafted to clarify the intended meaning).Show More By contrast, an increasingly sizable literature confirms the widespread intuition that the no-reading problem is indeed real and pervasive.19 19.See Yannis Bakos, Florencia Marotta-Wurgler & David R. Trossen, Does Anyone Read the Fine Print? Consumer Attention to Standard-Form Contracts, 43 J. Legal Stud. 1, 3–4, 32 (2014); Jean R. Sternlight, Creeping Mandatory Arbitration: Is It Just?,57 Stan. L. Rev. 1631, 1648 (2005); Ian Ayres & Alan Schwartz, The No-Reading Problem in Consumer Contract Law, 66 Stan. L. Rev. 545, 546 (2014); Florencia Marotta-Wurgler, Does Contract Disclosure Matter?, 168 J. Inst’l & Theoretical Econ. 94, 95–96 (2012).Show More Other important entries in the empirical literature document the combined effect of the no-reading and no-understanding problems, demonstrating that consumers often fail to appreciate the meaning of key terms like arbitration agreements and class action waivers contained within the broader contracts they receive.20 20.See Jeff Sovern, Elayne E. Greenberg, Paul F. Kirgis & Yuxiang Liu, “Whimsy Little Contracts” with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, 75 Md. L. Rev. 1, 45–47 (2015) (reporting that a minority of respondents understood that mandatory arbitration provisions contained within broader contracts precluded them from litigating large disputes and that class action waivers prevented them from participating in a class action); Roseanna Sommers, What Do Consumers Understand About Predispute Arbitration Agreements? An Empirical Investigation, PLOS ONE, Feb. 23, 2024, at 1, 9–12, https://doi.org/10.1371/journal.pone.02‌96179 [https://perma.cc/986Y-ACWZ]; Arbel & Toler, supra note 10, at 866–67.Show More But because these studies focus on consumer comprehension of entire contracts, they cannot clearly differentiate between the no-reading and no-understanding critiques of modern consumer contract law.

For these reasons, this Article empirically assesses how well typical consumers can understand key terms in one particularly important and pervasive type of standard-form consumer contract: homeowners insurance policies. Homeowners insurance provides a good setting to test consumer comprehension of contract language for several reasons.21 21.Because the terms of insurance policies, including homeowners insurance policies, are sometimes structured in ways that are unusual though perhaps not unique to the insurance context, our results may not be fully generalizable to all consumer contract settings.Show More First, a central goal of insurance law and regulation is to promote clear and comprehensible insurance policy language.22 22.Kyle Logue, Daniel Schwarcz & Brenda J. Cude, The Value of Understandable Consumer Insurance Contracts, 8 Int’l Rev. Fin. Consumers, no. 1, June 2023, at 1, 2; Boardman, supra note 13, at 1077; Christopher C. French, Understanding Insurance Policies as Noncontracts: An Alternative Approach to Drafting and Construing These Unique Financial Instruments, 89 Temp. L. Rev. 535, 553 (2017); Kenneth S. Abraham & Daniel Schwarcz, Insurance Law and Regulation: Cases and Materials 151 (7th ed. 2020).Show More Toward this end, the primary rule of insurance law is that ambiguities are interpreted against the drafter,23 23.See Kenneth S. Abraham, A Theory of Insurance Policy Interpretation, 95 Mich. L. Rev. 531, 531, 537–38 (1996); Michelle Boardman, Penalty Default Rules in Insurance Law, 40 Fla. St. U. L. Rev. 305, 327–28 (2013).Show More and a substantial majority of states impose readability requirements on insurance policies.24 24.See Cogan, supra note 13, at 120. To be sure, readability requirements often apply to consumer contracts other than insurance policies. See Blasie, Rise of Plain Language Laws, supra note 13, at 495; Blasie, Regulating Plain Language, supra note 13, at 703.Show More Second, comprehensible policy language can play a potentially vital role in promoting fair insurance markets even if consumers do not read their policies at the time of purchase.25 25.See Daniel Schwarcz, Coverage Information in Insurance Law, 101Minn. L. Rev. 1457, 1491 (2017).Show More For instance, comprehensible insurance policy language can discourage insurers from unreasonably denying claims by empowering consumers, insurance agents, and lawyers to detect and challenge such coverage denials.26 26.See Willem H. Van Boom, Pieter Desmet & Mark Van Dam, “If It’s Easy to Read, It’s Easy to Claim”—The Effect of the Readability of Insurance Contracts on Consumer Expectations and Conflict Behaviour, 39 J. Consumer Pol’y 187, 195 (2016); cf. Daniel Schwarcz, Transparently Opaque: Understanding the Lack of Transparency in Insurance Consumer Protection, 61 UCLA L. Rev. 394, 414 (2014) (explaining that opportunistic insurers may leverage complex coverage policies to delay payments or deny coverage).Show More Finally, the terms and structure of homeowners insurance policies are somewhat standardized across the country, allowing us to test widely used policy language, as well as less common variants.27 27.See Daniel Schwarcz, Reevaluating Standardized Insurance Policies, 78 U. Chi. L. Rev. 1263, 1272–73 (2011).Show More

To better understand how well consumers can comprehend specific insurance policy terms, we designed and deployed a series of survey-based experiments, which we administered to approximately 2,500 current U.S. homeowners who were previously involved in the decision to purchase or renew a homeowners insurance policy. In these experiments, we asked a control group of respondents to evaluate the likelihood that a typical homeowners insurance policy would cover a variety of losses, described in vignettes we crafted for this research, without providing these respondents with relevant insurance policy language. We presented the same coverage vignettes to a treatment group of respondents whom we provided with relevant excerpts from the most common template for homeowners insurance policies in the United States: the 2010 ISO HO3 policy.28 28.See generally Daniel Schwarcz, The Role of Courts in the Evolution of Standard Form Contracts: An Insurance Case Study, 46 BYU L. Rev. 471 (2021) (discussing the evolution of the ISO HO3 policy leading up to its 2010 revision).Show More To determine whether the vignettes resulted in clear coverage or non-coverage, we relied on the combined expertise of the co-authors, which we confirmed by querying several advanced AI systems.29 29.Notably, in one coverage scenario, an AI analysis produced by OpenAI o3 uncovered coverage issues that the human co-authors did not initially observe.Show More By comparing responses from participants who saw the operative policy language with those from participants who did not, we assessed how effectively that language fulfills its core function of giving policyholders meaningful notice of their coverage.30 30.In this Article, we focused our analysis on vignettes that resulted in unambiguous coverage determinations under the ISO HO3 policy. But we also tested consumers’ responses to ambiguous, atypical, and potentially unenforceable policy language. Cf. Ben-Shahar & Strahilevitz, supra note 18, at 1783–87 (using a similar vignette-based survey methodology to test consumer interpretation of both ambiguous and unambiguous contract provisions). Here, too, our initial hypothesis—that providing ambiguous policy language would increase the likelihood that respondents would recognize that there was no clear answer to the coverage question—proved incorrect in at least some of the coverage vignettes we tested. We report and discuss these results in Appendix C.Show More

We initially hypothesized that respondents provided with the relevant policy language would consistently offer more accurate answers about coverage than those without it. However, our results contradicted this hypothesis and diverged from prior literature, which suggested that consumers, on average, correctly interpret unambiguous contract language.31 31.Cf. Ben-Shahar & Strahilevitz, supra note 18, at 1801 (finding that survey respondents reliably shifted toward the intended interpretation when ambiguous contract language was revised for clarity).Show More Across the seven coverage vignettes we tested, respondents in three vignettes were less accurate when provided with the policy language than those who were not. The reduction in accuracy was substantial—ranging from approximately 18 to 33 percentage points—and statistically significant at the 1% level. In a fourth vignette, there was no significant difference in accuracy between those who received the policy language and those who did not. Even in the remaining three vignettes, where respondents with access to the policy language performed better, the accuracy improvements were inconsistent across the vignettes and smaller than might be expected.32 32.In particular, the percentage of respondents who provided accurate answers was higher by between roughly 13 percentage points on the low end and 34 percentage points on the high end across these four vignettes. In absolute terms, the percentage of respondents who received policy language and provided accurate answers to coverage questions ranged from roughly 20% to 72%. See infra Section IV.A, Figure 5.Show More

The variation in our results appears to be best explained by the structure of the policy language provided to respondents, though this conclusion is speculative. Specifically, in cases where the policy language was associated with less accuracy in respondents’ coverage assessments, the provisions were written in a way that could mislead readers who focused on only the first part of the excerpt. A careful reading of the initial portion often suggests one answer to the coverage question, whereas a thorough reading of the entire provision reveals the opposite answer to be correct.33 33.That is, for several of the coverage vignettes, it appears that the respondents may have read until they thought they understood the terms of the policy and then either stopped reading or stopped reading carefully. Determining which of those it was—partial reading or partial understanding—is not possible from our data, and further examination of that question would likely require qualitative research with consumers. One technique to further investigate the partial-reading or partial-understanding question is one-on-one cognitive interviews with consumers. In a cognitive interview, the interviewer gives the consumer the relevant document and asks the consumer to verbalize what they see and think as they interact with the document. See Gordon B. Willis & Anthony R. Artino Jr., What Do Our Respondents Think We’re Asking? Using Cognitive Interviewing to Improve Medical Education Surveys, 5 J. Graduate Med. Educ. 353, 353 (2013). Another technique is eye tracking, in which technology allows the researcher to see the portions of a document that a consumer views online. Benjamin T. Carter & Steven G. Luke, Best Practices in Eye Tracking Research, 155 Int’l J. Psychophysiology 49, 50 (2020).Show More This pattern suggests the existence of a type of problem not previously identified in the literature—a partial-reading or partial-understanding problem. Even more importantly, it creates significant consumer protection concerns, as this contractual structure—in which broad coverage grants are later restricted by specific exclusions—is a pervasive structural feature of insurance policies.34 34.See Abraham & Schwarcz, supra note 22, at 248, 529.Show More Notably, we also found limited evidence that respondents’ demographics or sophistication influenced the extent to which providing relevant policy language enhanced the accuracy of their coverage assessments.

Respondents who reviewed policy language reported greater confidence in their coverage assessments than those who did not. We found some evidence suggesting that highly confident respondents are more likely to provide accurate coverage assessments than their less confident peers.35 35.But seeLawrence Solan, Terri Rosenblatt & Daniel Osherson, False Consensus Bias in Contract Interpretation, 108 Colum. L. Rev. 1268, 1285, 1290, 1292–93 (2008).Show More But we found no statistically significant support to conclude that sophisticated consumers, higher-income consumers, or white consumers were more likely than their counterparts to provide accurate coverage assessments.36 36.See Yonathan A. Arbel, The Readability of Contracts: Big Data Analysis,21 J. Empirical Legal Stud. 927, 964 (2024) (positing that studies of contract readability must account for “diverse cultural, cognitive, and educational backgrounds”).Show More Nor did our results support a conclusion that seeing relevant policy language improved accuracy more for those in the selected subgroups than for their counterparts.37 37.Id.Show More These results suggest that, contrary to the conventional wisdom, a broad swath of the population (and not just a “vulnerable” subgroup) has difficulty decoding the “plain meaning” of insurance policy language.38 38.See, e.g., Alan Schwartz & Louis L. Wilde, Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests, 69 Va. L. Rev. 1387, 1389 (1983).Show More

We interpret our results, viewed as a whole, to have important theoretical and practical implications. On the theory side, they provide a novel reason to question the cornerstone of modern consumer law, that consumers have a “duty to read.” Although it has long been evident that most consumers do not attempt to read standard consumer forms, our research further indicates that even when they do, they often fail to fully grasp the terms. More concretely, our findings cast doubt on techniques aimed at increasing contract readability—such as highlighting key terms—when these measures are not accompanied by efforts to improve consumer comprehension and engagement with all terms. Finally, because our results reveal that even consumers with higher levels of sophistication often struggle to understand complex commercial contract language, they challenge efforts to tailor legal or regulatory interventions based on perceived consumer sophistication.

Our analysis is organized into five parts. Part I reviews the existing literature, highlighting the surprising lack of empirical evidence on consumers’ ability to understand the terms of standard-form contracts. In Part II, we outline our methodology testing this issue, and in Part III, we describe the data employed in our study. Part IV presents our results, and Part V explores their broader normative and practical implications.

  1.  See Restatement of Consumer Conts. § 2 (A.L.I. 2024); Margaret Jane Radin, Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law
    12–13
    (2013).

    ↑

  2.  See, e.g., Radin, supra note 1, at 14; Imre Stephen Szalai, The Prevalence of Consumer Arbitration Agreements by America’s Top Companies, 52 U.C. Davis L. Rev. Online 233, 236 (2019). ↑
  3.  See, e.g., Oren Bar-Gill, Seduction by Plastic, 98 Nw. U. L. Rev. 1373, 1376–77 (2004); Omri Ben-Shahar & Carl E. Schneider, More Than You Wanted to Know: The Failure of Mandated Disclosure 77 (2014); Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 Stan. L. Rev. 211, 240–41 (1995). ↑
  4.  See, e.g., Tess Wilkinson-Ryan, A Psychological Account of Consent to Fine Print, 99 Iowa L. Rev. 1745, 1749 (2014); Melvin Aron Eisenberg, Comment, Text Anxiety, 59 S. Cal. L. Rev. 305, 309 (1986); Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77 N.Y.U. L. Rev. 429, 436 (2002). ↑
  5.  See, e.g., Avery Katz, Your Terms or Mine? The Duty to Read the Fine Print in Contracts, 21 RAND J. Econ. 518, 519–20 (1990); Omri Ben-Shahar, The Myth of the ‘Opportunity to Read’ in Contract Law, 5 Eur. Rev. Cont. L. 1, 2 (2009). ↑
  6.  Charles L. Knapp, Is There a “Duty to Read”?, 66 Hastings L.J. 1083, 1085 (2015). ↑
  7.  See Uri Benoliel & Shmuel I. Becher, The Duty to Read the Unreadable, 60 B.C. L. Rev. 2255, 2277, 2282–83 (2019). ↑
  8.  See Daniel Schwarcz, A Products Liability Theory for the Judicial Regulation of Insurance Policies, 48 Wm. & Mary L. Rev. 1389, 1435–36 (2007); Oren Bar-Gill & Elizabeth Warren, Making Credit Safer, 157 U. Pa. L. Rev. 1, 98 (2008); CFPB Warns Against Deception in Contract Fine Print, Consumer Fin. Prot. Bureau (June 4, 2024, at 10:01 ET), https://www.consumerfinance.gov/about-us/newsroom/cfpb-warns-against-decep‌tion-in-contract-fine-print/ [https://perma.cc/24BT-BPAC]; Susan Block-Lieb & Edward J. Janger, Fit for Its Ordinary Purpose: Implied Warranties and Common Law Duties for Consumer Finance Contracts, 59 Hou. L. Rev. 551, 599 (2022). ↑
  9.  See Cynthia Adams, The Move Toward Using Plain Legal Language, 20
    TYL,

    no. 4, Summer 2016, at 6, 6. ↑

  10.  See, e.g., Yonathan A. Arbel & Andrew Toler, ALL-CAPS, 17 J. Empirical Legal Stud. 862, 863 (2020); David A. Hoffman, Relational Contracts of Adhesion, 85 U. Chi. L. Rev. 1395, 1428–31 (2018) (detailing examples of Kickstarter’s use of highlighting to improve comprehension). ↑
  11.  See Benedikt Schmitz & Charlotte Pavillon, Measuring Transparency in Consumer Contracts: The Usefulness of Readability Formulas Empirically Assessed, 9 J. Eur. Consumer & Mkt. L. 191, 191 (2020); George R. Milne & Mary J. Culnan, Strategies for Reducing Online Privacy Risks: Why Consumers Read (or Don’t Read) Online Privacy Notices, 18 J. Interactive Mktg., no. 3, Summer 2004, at 15, 25. ↑
  12.  Cf. Jonathan A. Obar & Anne Oeldorf-Hirsch, The Biggest Lie on the Internet: Ignoring the Privacy Policies and Terms of Service Policies of Social Networking Services, 23 Info. Commc’n & Soc’y 128, 140 (2020) (finding that research participants merely scrolled to accept the terms and conditions). ↑
  13.  See John Aloysius Cogan Jr., Readability, Contracts of Recurring Use, and the Problem of Ex Post Judicial Governance of Health Insurance Policies, 15 Roger Williams U. L. Rev. 93, 100 (2010); Michael A. Blasie, The Rise of Plain Language Laws, 76 U. Mia. L. Rev. 447, 481–84 (2022) [hereinafter Blasie, Rise of Plain Language Laws]; Michael A. Blasie, Regulating Plain Language, 2023 Wis. L. Rev. 687, 708–11 [hereinafter Blasie, Regulating Plain Language]; see also Michelle Boardman, Insuring Understanding: The Tested Language Defense, 95 Iowa L. Rev. 1075, 1077 (2010) (proposing a “tested language defense” that would allow insurers to defend against ambiguity claims by demonstrating that their policy language was empirically tested for consumer comprehension). ↑
  14.  See Yonathan A. Arbel & Shmuel I. Becher, Contracts in the Age of Smart Readers, 90 Geo. Wash. L. Rev. 83, 115 (2022). ↑
  15.  Cf. Omri Ben-Shahar & Adam Chilton, Simplification of Privacy Disclosures: An Experimental Test, 45 J. Legal Stud. S41, S61 (2016) (employing a survey-based methodology and finding that simplifying disclosures according to “best practices” had no significant effect on consumer comprehension of contract terms). ↑
  16.  See Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An Economic Theory of Default Rules, 99 Yale L.J. 87, 120–21 n.147 (1989). ↑
  17.  See infra Part I; Lior Jacob Strahilevitz & Matthew B. Kugler, Is Privacy Policy Language Irrelevant to Consumers?, 45 J. Legal Stud. S69, S72–73 (2016); Uri Y. Hacohen, Amit Elazari & Talia Schwartz-Maor, A Penny for Their Creations—Apprising Users’ Value of Copyrights in Their Social Media Content, 36 Berkeley Tech. L.J. 511, 531 (2021); Tess Wilkinson-Ryan, The Perverse Consequences of Disclosing Standard Terms, 103 Corn. L. Rev. 117, 120 (2017). ↑
  18.  See Omri Ben-Shahar & Lior Jacob Strahilevitz, Interpreting Contracts via Surveys and Experiments, 92 N.Y.U. L. Rev. 1753, 1787–88, 1791, 1794 (2017) (reporting the results of three surveys suggesting that, in the aggregate, surveyed consumers correctly alter their interpretation of contract terms that are redrafted to clarify the intended meaning). ↑
  19.  See Yannis Bakos, Florencia Marotta-Wurgler & David R. Trossen, Does Anyone Read the Fine Print? Consumer Attention to Standard-Form Contracts, 43 J. Legal Stud. 1, 3–4, 32 (2014); Jean R. Sternlight, Creeping Mandatory Arbitration: Is It Just?, 57 Stan. L. Rev. 1631, 1648 (2005); Ian Ayres & Alan Schwartz, The No-Reading Problem in Consumer Contract Law, 66 Stan. L. Rev. 545, 546 (2014); Florencia Marotta-Wurgler, Does Contract Disclosure Matter?, 168 J. Inst’l & Theoretical Econ. 94, 95–96 (2012). ↑
  20.  See Jeff Sovern, Elayne E. Greenberg, Paul F. Kirgis & Yuxiang Liu, “Whimsy Little Contracts” with Unexpected Consequences: An Empirical Analysis of Consumer Understanding of Arbitration Agreements, 75 Md. L. Rev. 1, 45–47 (2015) (reporting that a minority of respondents understood that mandatory arbitration provisions contained within broader contracts precluded them from litigating large disputes and that class action waivers prevented them from participating in a class action); Roseanna Sommers, What Do Consumers Understand About Predispute Arbitration Agreements? An Empirical Investigation, PLOS
    ONE,

    Feb. 23, 2024, at 1, 9–12, https://doi.org/10.1371/journal.pone.02‌96179 [https://perma.cc/986Y-ACWZ]; Arbel & Toler, supra note 10, at 866–67. ↑

  21.  Because the terms of insurance policies, including homeowners insurance policies, are sometimes structured in ways that are unusual though perhaps not unique to the insurance context, our results may not be fully generalizable to all consumer contract settings. ↑
  22.  Kyle Logue, Daniel Schwarcz & Brenda J. Cude, The Value of Understandable Consumer Insurance Contracts, 8 Int’l Rev. Fin. Consumers, no. 1, June 2023, at 1, 2; Boardman, supra note 13, at 1077; Christopher C. French, Understanding Insurance Policies as Noncontracts: An Alternative Approach to Drafting and Construing These Unique Financial Instruments, 89 Temp. L. Rev. 535, 553 (2017); Kenneth S. Abraham & Daniel Schwarcz, Insurance Law and Regulation: Cases and Materials 151 (7th ed. 2020). ↑
  23.  See Kenneth S. Abraham, A Theory of Insurance Policy Interpretation, 95 Mich. L. Rev. 531, 531, 537–38 (1996); Michelle Boardman, Penalty Default Rules in Insurance Law, 40 Fla. St. U. L. Rev. 305, 327–28 (2013). ↑
  24.  See Cogan, supra note 13, at 120. To be sure, readability requirements often apply to consumer contracts other than insurance policies. See Blasie, Rise of Plain Language Laws, supra note 13, at 495; Blasie, Regulating Plain Language, supra note 13, at 703. ↑
  25.  See Daniel Schwarcz, Coverage Information in Insurance Law, 101 Minn. L. Rev. 1457, 1491 (2017). ↑
  26.  See Willem H. Van Boom, Pieter Desmet & Mark Van Dam, “If It’s Easy to Read, It’s Easy to Claim”—The Effect of the Readability of Insurance Contracts on Consumer Expectations and Conflict Behaviour, 39 J. Consumer Pol’y 187, 195 (2016); cf. Daniel Schwarcz, Transparently Opaque: Understanding the Lack of Transparency in Insurance Consumer Protection, 61 UCLA L. Rev. 394, 414 (2014) (explaining that opportunistic insurers may leverage complex coverage policies to delay payments or deny coverage). ↑
  27.  See Daniel Schwarcz, Reevaluating Standardized Insurance Policies, 78 U. Chi. L. Rev. 1263, 1272–73 (2011). ↑
  28.  See generally Daniel Schwarcz, The Role of Courts in the Evolution of Standard Form Contracts: An Insurance Case Study, 46 BYU L. Rev. 471 (2021) (discussing the evolution of the ISO HO3 policy leading up to its 2010 revision). ↑
  29.  Notably, in one coverage scenario, an AI analysis produced by OpenAI o3 uncovered coverage issues that the human co-authors did not initially observe. ↑
  30.  In this Article, we focused our analysis on vignettes that resulted in unambiguous coverage determinations under the ISO HO3 policy. But we also tested consumers’ responses to ambiguous, atypical, and potentially unenforceable policy language. Cf. Ben-Shahar & Strahilevitz, supra note 18, at 1783–87 (using a similar vignette-based survey methodology to test consumer interpretation of both ambiguous and unambiguous contract provisions). Here, too, our initial hypothesis—that providing ambiguous policy language would increase the likelihood that respondents would recognize that there was no clear answer to the coverage question—proved incorrect in at least some of the coverage vignettes we tested. We report and discuss these results in Appendix C. ↑
  31.  Cf. Ben-Shahar & Strahilevitz, supra note 18, at 1801 (finding that survey respondents reliably shifted toward the intended interpretation when ambiguous contract language was revised for clarity). ↑
  32.  In particular, the percentage of respondents who provided accurate answers was higher by between roughly 13 percentage points on the low end and 34 percentage points on the high end across these four vignettes. In absolute terms, the percentage of respondents who received policy language and provided accurate answers to coverage questions ranged from roughly 20% to 72%. See infra Section IV.A, Figure 5. ↑
  33.  That is, for several of the coverage vignettes, it appears that the respondents may have read until they thought they understood the terms of the policy and then either stopped reading or stopped reading carefully. Determining which of those it was—partial reading or partial understanding—is not possible from our data, and further examination of that question would likely require qualitative research with consumers. One technique to further investigate the partial-reading or partial-understanding question is one-on-one cognitive interviews with consumers. In a cognitive interview, the interviewer gives the consumer the relevant document and asks the consumer to verbalize what they see and think as they interact with the document. See Gordon B. Willis & Anthony R. Artino Jr., What Do Our Respondents Think We’re Asking? Using Cognitive Interviewing to Improve Medical Education Surveys, 5 J. Graduate Med. Educ. 353, 353 (2013). Another technique is eye tracking, in which technology allows the researcher to see the portions of a document that a consumer views online. Benjamin T. Carter & Steven G. Luke, Best Practices in Eye Tracking Research, 155 Int’l J. Psychophysiology 49, 50 (2020). ↑
  34.  See Abraham & Schwarcz, supra note 22, at 248, 529. ↑
  35.  But see Lawrence Solan, Terri Rosenblatt & Daniel Osherson, False Consensus Bias in Contract Interpretation, 108 Colum. L. Rev. 1268, 1285, 1290, 1292–93 (2008). ↑
  36.  See Yonathan A. Arbel, The Readability of Contracts: Big Data Analysis, 21 J. Empirical Legal Stud. 927, 964 (2024) (positing that studies of contract readability must account for “diverse cultural, cognitive, and educational backgrounds”). ↑
  37.  Id. ↑

  38.  See, e.g., Alan Schwartz & Louis L. Wilde, Imperfect Information in Markets for Contract Terms: The Examples of Warranties and Security Interests, 69 Va. L. Rev. 1387, 1389 (1983). ↑

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