State RegulationsIL specificDifficulty 2/5
An Illinois producer tells an applicant that a policy he is selling pays for flood damage to the home, knowing the policy contains no such coverage. Which practice has the producer committed?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
215 ILCS 5/149 prohibits misrepresenting the terms, benefits, or conditions of any policy. Describing coverage that does not exist is the core case, and the Illinois Department of Insurance treats such statements as grounds for action against the producer regardless of whether the applicant relies on them.
Why the other options are wrong
- A) Nothing of value was returned or offered outside the policy; 215 ILCS 5/151 addresses inducements, not false coverage statements.
- B) Defamation under 215 ILCS 5/149 concerns disparaging competitors; this statement is about the producer's own product's benefits.
- D) 215 ILCS 5/154.6 governs insurers' claims-handling conduct after a loss, not sales statements made before a policy exists.
Memory hook
Inventing coverage is misrepresentation, not a claims problem; 149 polices the sales pitch.