Under California Insurance Code Section 381, which of the following is NOT required to be specified in an insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Section 381 requires every California policy to specify six items: the parties, the property or life insured, the interest of the insured if not the absolute owner, the risks insured against, the period of coverage, and the premium or the basis for calculating it. The insurer's financial strength rating is not among these requirements. Ratings are published by independent rating agencies as comparison and marketing information, not as statutory policy provisions that must appear in the contract. This is a favorite exam distinction between required and optional policy content.
Why the other options are wrong
- A) The names of the parties are one of the six required specifications under Section 381. The identity of the contracting parties is one of the six items Section 381 requires in every policy.
- B) The risks insured against must be specified so the insured knows exactly what perils and events are covered. Naming the risks insured tells the policyholder what is covered and is a mandatory Section 381 item.
- C) The period during which the insurance continues is a required provision under Section 381. The period of coverage is one of the six required specifications under Section 381.
Memory hook
Section 381's six-pack: parties, property, interest, risks, period, premium. Ratings are outside the box.