Richard owns an insurance policy that is renewable only at the option of the insurance company. His policy is considered to be

• A. Cancellable
• B. Conditionally Renewable
• C. Nonrenewable
• D. Optionally Renewable

Answer: (D)

In this context, renewal terms decide who controls whether the policy continues after each term. An optionally renewable policy is one where the insurer has the option to renew or not renew at the end of each term, and the insured does not have a guaranteed renewal. The insurer can choose to renew, possibly with adjustments like higher premiums, but renewal is not assured for the insured.

Richard’s policy is described as being renewable only at the option of the insurance company, so it fits the concept of optionally renewable—the insurer holds the renewal decision. It’s not cancellable (the insurer isn’t free to cancel at any time without cause), not nonrenewable (renewal is possible), and not conditionally renewable (renewal isn’t contingent on meeting stated conditions in the policy).