What defines an insurance policy?

An insurance policy is fundamentally defined as a contract that details the coverage and terms agreed upon by the insurer and the insured. This document outlines the specific protections provided, including what risks are covered, the circumstances under which claims can be made, any exclusions that apply, and the obligations of both parties. The clarity and specificity of the contract ensure that all parties understand their rights and responsibilities, which is critical in the event of a claim.

In contrast, options like guidelines on selling insurance, reports on company performance, or summaries of financial investments do not encapsulate the essence of what an insurance policy is. These other documents may serve different purposes—guidelines help agents understand the selling process, performance reports assess the financial health of insurance companies, and investment summaries outline the financial strategies of individuals or entities. However, they do not fulfill the fundamental role of specifying the terms and coverage of insurance, which is central to an insurance policy.