'Policy,' 'politics,' and 'police' are siblings — all from Greek 'polis' (city). Governance in triplicate.
A course or principle of action adopted or proposed by an organization or individual; prudent or expedient conduct or action.
From Old French 'policie' (civil administration, government), from Late Latin 'politia' (citizenship, government), from Greek 'politeia' (πολιτεία, citizenship, constitution, government), from 'politēs' (citizen), from 'polis' (city). The 'governance' sense of 'policy' and the 'insurance document' sense are entirely different words that happen to be spelled the same. The insurance sense comes from Italian 'polizza' (a written promise), probably from Medieval Latin
English has two completely unrelated words spelled 'policy.' The governance sense (a policy decision) comes from Greek 'polis' through the chain described above. The insurance sense (an insurance policy) comes from Italian 'polizza' (a written promise or ticket), probably from Medieval Greek 'apodeixis' (proof, receipt). They converged to the same