Under California Insurance Code Section 780, an insurer or its agent is prohibited from issuing or circulating any statement that misrepresents:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Section 780 prohibits insurers, their officers and agents, brokers, and solicitors from causing to be issued, circulated, or used any statement known — or that should have been known — to misrepresent the terms of a policy, the benefits or privileges promised under it, or the future dividends payable under it. The statute targets marketing and sales materials that distort what the coverage actually provides, such as promising guaranteed dividends or misstating the benefits of a policy. Because such misrepresentations can induce applicants to buy unsuitable coverage, violations carry regulatory consequences and can expose producers to discipline.
Why the other options are wrong
- B) Private medical history is protected by privacy rules and concerns the applicant's own statements, but Section 780 concerns statements about the policy itself, not about the applicant's health.
- C) Insurers are not required to pay all claims — only covered claims — and Section 780 does not address the insurer's claim obligations directly.
- D) The commissioner's enforcement authority is a matter of statute, not the subject of marketing statements; Section 780 protects consumers from distorted descriptions of coverage.
Memory hook
Section 780: do not lie about the policy — its terms, its benefits, or its future dividends. The paper, not the person.