State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under CIC Section 381, a California insurance policy must state the premium charged or:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Section 381 requires the policy to specify the premium, or if the premium is not fixed, the basis on which it is to be computed, so that the insured can determine the price of the coverage. This is one of the six required elements of a California policy. Commissions, investment returns, and the applicant's income are not among the statutory required contents, and their presence or absence does not affect the validity of the policy.
Why the other options are wrong
- A) Commissions are internal compensation arrangements between the insurer and the producer and are not required policy contents.
- B) Investment returns are the insurer's business results, unrelated to the price stated in the policy.
- C) The applicant's income is an underwriting consideration, not a required policy element.
Memory hook
State the price or state the formula for the price.