Source : Webster's Revised Unabridged Dictionary (1913)

Policy \Pol"i*cy\, v. t. [imp. & p. p. {Policied}; p. pr. & vb.
   n. {Policying}.]
   To regulate by laws; to reduce to order. [Obs.] ``Policying
   of cities.'' --Bacon.

Policy \Pol"i*cy\, n.; pl. {Policies}. [L. politia, Gr. ?; cf.
   F. police, Of. police. See {Police}, n.]
   1. Civil polity. [Obs.]

   2. The settled method by which the government and affairs of
      a nation are, or may be, administered; a system of public
      or official administration, as designed to promote the
      external or internal prosperity of a state.

   3. The method by which any institution is administered;
      system of management; course.

   4. Management or administration based on temporal or material
      interest, rather than on principles of equity or honor;
      hence, worldly wisdom; dexterity of management; cunning;
      stratagem.

   5. Prudence or wisdom in the management of public and private
      affairs; wisdom; sagacity; wit.

            The very policy of a hostess, finding his purse so
            far above his clothes, did detect him. --Fuller.

   6. Motive; object; inducement. [Obs.]

            What policy have you to bestow a benefit where it is
            counted an injury?                    --Sir P.
                                                  Sidney.

   Syn: See {Polity}.

Policy \Pol"i*cy\, n. [F. police; cf. Pr. polissia, Sp.
   p['o]lizia, It. p['o]lizza; of uncertain origin; cf. L.
   pollex thumb (as being used in pressing the seal), in LL.
   also, seal; or cf. LL. politicum, poleticum, polecticum, L.
   polyptychum, account book, register, fr. Gr. ? having many
   folds or leaves; ? many + ? fold, leaf, from ? to fold; or
   cf. LL. apodixa a receipt.]
   1. A ticket or warrant for money in the public funds.

   2. The writing or instrument in which a contract of insurance
      is embodied; an instrument in writing containing the terms
      and conditions on which one party engages to indemnify
      another against loss arising from certain hazards, perils,
      or risks to which his person or property may be exposed.
      See {Insurance}.

   3. A method of gambling by betting as to what numbers will be
      drawn in a lottery; as, to play policy.

   {Interest policy}, a policy that shows by its form that the
      assured has a real, substantial interest in the matter
      insured.

   {Open policy}, one in which the value of the goods or
      property insured is not mentioned.

   {Policy book}, a book to contain a record of insurance
      policies.

   {Policy holder}, one to whom an insurance policy has been
      granted.

   {Policy shop}, a gambling place where one may bet on the
      numbers which will be drawn in lotteries.

   {Valued policy}, one in which the value of the goods,
      property, or interest insured is specified.

   {Wager policy}, a policy that shows on the face of it that
      the contract it embodies is a pretended insurance, founded
      on an ideal risk, where the insured has no interest in
      anything insured.

Source : WordNet®

policy
     n 1: a line of argument rationalizing the course of action of a
          government; "they debated the policy or impolicy of the
          proposed legislation"
     2: a plan of action adopted by an individual or social group;
        "it was a policy of retribution"; "a politician keeps
        changing his policies"
     3: written contract or certificate of insurance; "you should
        have read the small print on your policy" [syn: {insurance
        policy}, {insurance}]