How do statutory policies primarily differ from non-statutory policies?

How do statutory policies primarily differ from non-statutory policies?

• A. Low premiums.
• B. Defined by state laws.
• C. Written by private companies.
• D. Offer broader coverage options.

Answer: (B)

Statutory policies are primarily defined by state laws, which means that they must adhere to specific regulations and standards set forth by the state's legislative framework. These policies are often created to offer a minimum level of protection or coverage that is mandated to meet the public’s interests, such as workers’ compensation or certain liability insurance types. In contrast, non-statutory policies are typically created by private companies and can vary widely. They are not bound by the same legal requirements, allowing insurers greater flexibility in drafting the terms, coverage limits, and conditions of these policies. This distinction emphasizes the regulatory nature of statutory policies, ensuring they align with legal requirements designed to protect consumers and maintain fairness in the insurance market.

Statutory policies are primarily defined by state laws, which means that they must adhere to specific regulations and standards set forth by the state's legislative framework. These policies are often created to offer a minimum level of protection or coverage that is mandated to meet the public’s interests, such as workers’ compensation or certain liability insurance types.

In contrast, non-statutory policies are typically created by private companies and can vary widely. They are not bound by the same legal requirements, allowing insurers greater flexibility in drafting the terms, coverage limits, and conditions of these policies. This distinction emphasizes the regulatory nature of statutory policies, ensuring they align with legal requirements designed to protect consumers and maintain fairness in the insurance market.