State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 381, one of the six required specifications that must appear in every insurance policy is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 381 requires every California policy to specify six items: the parties, the property or life insured, the insured's interest, the risks insured against, the period of coverage, and the premium or the basis for computing it. The premium specification ensures the insured knows exactly what is being paid. Financial ratings, commissions, and dividends are not among the six statutory requirements.
Why the other options are wrong
- B) Financial ratings are informative marketing data published by rating agencies; no statute requires them in the policy.
- C) The producer's commission is an internal compensation arrangement and is not a required policy provision.
- D) Dividends are payable only on participating policies and are never a universal statutory requirement.
Memory hook
Section 381's six-pack: parties, subject, interest, risks, period, premium. Commissions and ratings are outside the pack.