Policy Translations Into Spanish Fraught with Potential Legal Issues

A 2008 study by the Life and Health Insurance Foundation for Education found that Hispanics overwhelmingly consider it important to own life insurance, yet nearly half think they do not have sufficient coverage. Among the main reasons mentioned for this disparity was a basic lack of knowledge about insurance products. For years, insurers have responded to this gap through various forms of community outreach, including offering products in the Spanish language.

Although such efforts are laudable, and make good business sense, translating policies and related disclosures into Spanish is an undertaking fraught with potential legal problems. Some states have enacted consumer protection laws covering translated business documents. All states have laws prohibiting unfair business practices, as well as fraud in the inducement of contracts. Such legal theories could be grist for attempts to render ineffective the obligations of insureds under all manner of insurance policies—from credit insurance to private mortgage insurance, to property and casualty insurance. Some examples are instructive:

• At its core, an insurance policy is a contract. Yet, in English, people talk about “buying insurance” or “taking out” a policy. Neither concept directly translates into Spanish: to buy insurance is to “contract” for it (contratar un seguro); taking out a policy is the term formalizar un seguro (to “enter into” an insurance contract).
• A policy may provide “personal liability” coverage for “property damage.” Such liability coverage is not cobertura de responsabilidad personal, but rather cobertura de responsabilidad civil. Similarly, property damage is often translated literally as daños a propiedad, but this is wrong because propiedad means “ownership,” as well as “property.” The correct translation is daños materiales.
• In the insurance context, the term compensación relates to “offsets” (e.g., offsets of premiums) or a “balancing” of factors (e.g., a balancing of portfolio risks). Translators, however, sometimes incorrectly say that uninsured motorist coverage pays compensación in the event one is injured by a driver without insurance. Instead, such coverage pays una indemnización por daños y perjuicios (legal compensation for damages and losses) suffered in an accident.
• Comprehensive insurance should not be translated as seguro de cobetura completa (a rather meaningless statement concerning “complete insurance coverage”); rather, it is seguro de cobertura multi-riesgo (“multi-risk” insurance).
• If we say that existing coverage has been modified into “paid-up insurance,” we do not mean that is it is un seguro redimido (“retired” or “redeemed”) but rather that is un seguro liberado de prima (insurance for which no additional premiums are due, given current or prospective cash values).
• The syntax of a translation can have a subtle, yet potentially sweeping consequence. Let’ say an insurer discloses that “private flood insurance may be available on a limited basis in Special Flood Hazard Areas (SFHA).” The translator then places the word “limited” as follows: Puede ser que un seguro privado contra inundación limitada esté disponible en las áreas SFHA. This suggests the actual coverage is limited, when it is the availability of such insurance that may be restricted. Moving the word “limitada” to the correct place renders an accurate translation: Puede ser que un seguro privado contra inundación esté disponible en forma limitada en las áreas SFHA.

Can an assortment of slight translation errors spread among a policy or disclosure statement expose an insurer to liability? Perhaps not, but even a few significant errors within crucial provisions—such as incontestability clauses—are more likely to engender potential claims brought by an entire class of affected insureds.

Moreover, if key wording from the English language document is missing from the translation—e.g., the words “not” or “maximum” are inadvertently omitted from the original translation—the potential for liability may increase, regardless of the accuracy of the remaining translation.

Insurers should always take special care to assure that Spanish translations of insurance documents fully comply with the intent of their English counterparts. It is not only good for business, but also a wise form of coverage against needless liability.