Which of the following is NOT required to be specified in an insurance policy under CIC §381?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
CIC §381 requires a policy to specify the parties between whom the contract is made; the property or life insured; the insured's interest in the property if the insured is not the absolute owner; the risks insured against; the period during which the insurance continues; and the premium, or the basis and rates for determining it. A financial rating of the insurer is NOT among the required specifications. Ratings are published by independent agencies such as AM Best but are not a contractual specification. This distinction is a common examination trap, because applicants often expect ratings to appear in the contract when they do not.
Why the other options are wrong
- B) The parties are required, because the contract must identify between whom it is made, meaning the insurer and the policyowner. Without named parties the contract would not be enforceable.
- C) The subject of the insurance, whether property or a life, is a required specification under the statute. The policy must state precisely what is being insured, since coverage attaches to the identified subject.
- D) The policy period must be stated, as must the premium or the basis for determining it, under CIC §381. Both the duration and the price are essential specifications of the contract.
Memory hook
§381 spec sheet: parties, subject, interest, risks, period, premium. No credit score for the insurer.