State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California Insurance Code Section 381, which of the following items must a health insurance policy specify?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 381 requires every policy to specify, among other things, the subject matter to be insured — the thing or interest on which the insurance operates. In a health policy, the subject matter is the insured person's health and the financial consequences of its impairment, such as medical expenses. This specification, together with the parties, insurable interest, risks, period, and premium, defines the contract's scope and prevents ambiguity about what was actually insured.
Why the other options are wrong
- B) Commission schedules are contractual arrangements between insurer and producer; they are not a required policy specification.
- C) Investment returns are unrelated to the subject matter of the coverage and are not a required specification.
- D) The agent's office address is a business detail, not one of the six Section 381 specifications.
Memory hook
Section 381 asks: what is insured? In health, the answer is the person's health and the bills it can produce.