1 [pol-uh-see]
noun, plural policies.
a definite course of action adopted for the sake of expediency, facility, etc.: We have a new company policy.
a course of action adopted and pursued by a government, ruler, political party, etc.: our nation's foreign policy.
action or procedure conforming to or considered with reference to prudence or expediency: It was good policy to consent.
sagacity; shrewdness: Showing great policy, he pitted his enemies against one another.
Rare. government; polity.

1350–1400; Middle English policie government, civil administration < Middle French < Latin polītīa polity

1. strategy, principle, rule. 4. acumen, astuteness, skill, art.

4. ingenuousness, naiveté.
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2 [pol-uh-see]
noun, plural policies.
a document embodying a contract of insurance.
a method of gambling in which bets are made on numbers to be drawn by lottery.
numbers pool ( def 2 ).

1555–65; < Middle French police (< Italian polizza < Medieval Latin apodīxa receipt ≪ Greek apódeixis a showing or setting forth; see apodictic, -sis) + -y3

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Based on the Random House Dictionary, © Random House, Inc. 2014.
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World English Dictionary
policy1 (ˈpɒlɪsɪ)
n , pl -cies
1.  a plan of action adopted or pursued by an individual, government, party, business, etc
2.  wisdom, prudence, shrewdness, or sagacity
3.  (Scot) (often plural) the improved grounds surrounding a country house
[C14: from Old French policie, from Latin polītīa administration, polity]

policy2 (ˈpɒlɪsɪ)
n , pl -cies
a document containing a contract of insurance
[C16: from Old French police certificate, from Old Italian polizza, from Latin apodixis proof, from Greek apodeixis demonstration, proof]

Collins English Dictionary - Complete & Unabridged 10th Edition
2009 © William Collins Sons & Co. Ltd. 1979, 1986 © HarperCollins
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Word Origin & History

"way of management, government, administration," late 14c., from O.Fr. policie (14c.) "civil administration," from L. politia "the state," from Gk. politeia "state, administration, government, citizenship," from polites "citizen," from polis "city, state," from PIE *p(o)lH- "enclosed space, often on
high ground" (cf. Skt. pur, puram "city, citadel," Lith. pilis "fortress"). Meaning "plan of action, way of management" first recorded c.1406.

"written insurance agreement," 1565, from M.Fr. police "contract, bill of lading" (1371), from It. polizza "written evidence of a transaction," from M.L. apodissa "receipt for money," from Gk. apodexis "proof, declaration," from apo- "off" + deiknynia "to show," cognate with L. dicere "to tell" (see
Online Etymology Dictionary, © 2010 Douglas Harper
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Example sentences
The current government has pursued relatively sound fiscal policies, resulting
  in balanced budgets and low public debt.
Few of them were even dimly interested in the conflict of policies or in the
  science of government.
He hoped in his second term to accomplish substantial results in the
  development and affirmation of those policies.
More depends on the traditions and the administrative, disciplinary, and social
  policies of the school.
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