Which of the following best describes the unfair trade practice of defamation?

• A. Making derogatory oral statements about another insurer's financial condition
• B. Providing incorrect policy language to a customer
• C. Overstating coverage limits in a quote
• D. Withholding premium refunds

Answer: (A)

Defamation as an unfair trade practice involves making false statements about another insurer that could harm its reputation or financial condition. Saying derogatory things about a competitor’s financial health to influence customers or market perception fits this idea exactly, because it intentionally damages that insurer’s credibility with the public and can mislead consumers.

The other scenarios describe different improper actions but not defamation: giving incorrect policy language is misrepresentation of the contract terms; overstating coverage in a quote is also misrepresentation or misleading pricing; withholding premium refunds relates to improper handling of refunds or claims practices. None of these centralizes the idea of making false, harmful statements about a rival’s finances, which is the hallmark of defamation in unfair trade practices.