California Property & Casualty Broker-AgentCalifornia LawMedium
A California Property & Casualty Broker-Agent is preparing to present a policy to a client. Which of the following is considered an unfair trade practice known as 'defamation' under the California Insurance Code?
- APersuading an insured to surrender an existing policy for a new one to the insured's detriment.
- BMaking an untrue statement that is derogatory to the financial condition of an insurer.
- COffering a prospective client an inducement not specified in the policy.
- DMisrepresenting the terms, benefits, or advantages of an insurance policy.
Show answer & explanationAnswer & explanation
Correct answer: B. Making an untrue statement that is derogatory to the financial condition of an insurer.
Defamation, in the context of insurance, refers to making false and malicious statements about the financial condition of an insurer or the integrity of its employees, as defined by the California Insurance Code.
Why the other options are wrong
- A. This describes twisting, another unfair trade practice, but not defamation.
- C. This describes rebating, which is another unfair trade practice, but not defamation.
- D. This describes misrepresentation, another unfair trade practice, but not defamation.
Defamation (Insurance)
In California insurance law, defamation is an unfair trade practice involving making false and malicious statements about the financial condition of any insurer or the integrity of any person engaged in the insurance business.
- False, derogatory statements
- Targets insurer's financial condition or integrity
- Unfair trade practice
Memory trick: Don't 'S.M.I.L.E.' (Slander, Misrepresent, Induce, Lie, Entice) unethically.