Which of the following is NOT among the six provisions required in a policy under California Insurance Code Section 381?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 381 of the California Insurance Code requires every policy to state six items: the parties to the contract, the subject matter insured, the insurable interest of the insured, the risks insured against, the period during which the insurance is to continue, and the premium, or the basis for calculating it. These six provisions define the essential terms needed to make the written contract complete and enforceable. Information such as the insurer's projected investment returns or anticipated financial performance is not among the required provisions, because it does not describe the coverage being provided. The statutory list tells the insured what protection is bought, for what property or life, for how long, against which perils, and at what price.
Why the other options are wrong
- B) The subject matter insured is one of the six mandatory provisions under Section 381. The policy must state what is being insured, whether that is a life, a person's health, or property, so that the coverage is clearly identified in the written contract.
- C) The risks insured against must be stated in the policy so that the insured knows exactly what perils or events are covered and what is excluded. This is one of the six required provisions, not an optional term the insurer may omit.
- D) The premium, or the basis for calculating it, is expressly required by Section 381. The insured must know what the coverage costs and how the price is computed, and this term is among the six mandatory provisions of the policy.
Memory hook
Six required provisions; investment forecasts are not among them.