South Carolina Personal Lines Practice Exam

What is a common term for making false statements about an insurer that may damage their reputation?

1. Fraud

2. Slander

3. Defamation

4. Libel

The correct answer is: Defamation

Defamation refers to the act of making false statements about an individual or entity that can harm their reputation. In the context of insurance, if someone were to spread untrue information about an insurer—such as claiming they are financially unstable or providing poor customer service—this would generally fall under defamation. Defamation encompasses both slander and libel. Slander involves spoken statements, while libel pertains to written or published statements. Since the question is asking for a common term regarding false statements that may damage an insurer's reputation, "defamation" is the most inclusive and accurate term, which is why it is the correct choice. Other options represent specific forms or aspects of defamation: fraud involves deception for gain, slander is specifically about spoken falsehoods, and libel refers to false statements made in written form. However, none of these terms captures the full scope of damaging statements against another party's reputation the way "defamation" does.