Under T.C.A. § 56-8-105, an insurer that misrepresents pertinent facts or insurance policy provisions to a claimant in order to reduce or settle a claim has:

Why A is correct

T.C.A. § 56-8-105 lists misrepresenting pertinent facts or insurance policy provisions relating to the coverages at issue among the unfair claims settlement practices. An insurer that distorts facts or policy terms to pressure a claimant into accepting a reduced settlement is not reserving rights; it is deceiving the very person the policy protects. The Tennessee Department of Commerce & Insurance enforces the prohibition, and a claim that is eventually paid does not undo the misrepresentation made along the way.

Why the other options are wrong

• B) A reservation of rights is a truthful statement of the insurer's positions; misrepresenting facts or policy provisions to cut a claim down is deception, not reservation.
• C) Defamation concerns false statements damaging a person's reputation communicated to third parties, which is a separate unfair practice and not what occurred here.
• D) Rebating involves inducements to purchase insurance, not the handling of claims, so payment or nonpayment of the claim is beside the point.

Memory hook

Twisting the facts or the policy terms to shrink a claim = unfair claims practice.