Under California Insurance Code Section 380, the 'policy' is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Section 380 defines the policy as the written instrument in which the contract of insurance is set forth. The policy is the written embodiment of the agreement between the insurer and the insured, and it contains the terms of coverage. The application is typically attached to and made part of the policy under the entire-contract rule, but the application itself is not the policy. An oral promise of coverage does not satisfy the requirement of a written instrument, and an insurer's certificate of authority is a licensing document issued by the Commissioner rather than a contract of insurance.
Why the other options are wrong
- D) Section 380 requires a written instrument in which the contract is set forth. An oral promise of coverage does not satisfy the statutory definition of a policy. This common misconception is exactly what the governing rule rejects, so the option is incorrect.
- A) The application is the applicant's request for coverage and a source of statements. Once attached it becomes part of the contract, but it is not the policy itself. This contradicts the governing rule explained above and therefore cannot be the correct answer.
- C) A certificate of authority is the document authorizing an insurer to transact insurance in California. It is a licensing document, not the contract of insurance. The controlling legal standard set out above demonstrates precisely why this option is incorrect.
Memory hook
The policy is the paper the contract lives in. Application asks for it; certificate licenses it; policy writes it.