State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An insurance agent publishes a false statement accusing a competing insurer of being insolvent, intending to steer customers away. Under California Insurance Code Section 790.03, this conduct is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 790.03 identifies unfair methods of competition and unfair or deceptive acts, including defamation — making false or malicious statements that criticize an insurer's financial condition or business and that are calculated to injure its reputation. Because only the Commissioner may enforce the unfair practices provisions, the false advertising of competitors is a regulatory violation as well as a potential civil wrong.
Why the other options are wrong
- B) Defaming a competitor is not legitimate competition; it is a specifically prohibited unfair practice.
- C) Private litigation is available, but the Commissioner's exclusive enforcement of the unfair practices act also applies.
- D) The prohibition applies regardless of whether the false statement is written or oral.
Memory hook
Trash talk is a trade practice violation. Defaming a competitor's finances violates Section 790.03.