Which statement accurately states Tennessee's rule on preferences or distinctions based on group membership in certain insurance transactions, and its exception?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
T.C.A. § 56-8-104(18) addresses preferences or distinctions in certain insurance transactions: an insurer may not grant a preference based on group membership in property, marine, casualty, or surety insurance. The subsection then carves out its exception, allowing a domestic insurer to insure the members of its own organization only. Knowing both the covered lines and the member-only carve-out matters, because the exception is narrow and applies to domestic insurers confining their book to their own membership rather than to marketing preferences generally.
Why the other options are wrong
- A) Free favoritism toward trade-association members in casualty lines is precisely the preference the statute bars; the member-only exception belongs to domestic insurers insuring their own members.
- B) The prohibition is limited to the enumerated transaction types, and the statute itself supplies an exception, so a no-exceptions, all-lines statement overstates the rule.
- D) The rule as written covers property, marine, casualty, and surety transactions; it does not draw the permitted-versus-barred line at property versus life and health.
Memory hook
No group favorites in property, marine, casualty, surety — unless the domestic insurer sticks to its own members.