Which of the following is considered an unfair trade practice?

Making a material misrepresentation to the insured is classified as an unfair trade practice because it undermines the integrity of the insurance market and damages the trust between insurers and consumers. When an insurer provides false or misleading information regarding the terms, coverage, or premiums of a policy, it not only violates ethical standards but also can lead to significant financial harm to the insured. Misrepresentation can result in policyholders being unaware of crucial details about their coverage, which can affect their decisions and ultimately their protection. This practice is prohibited under state laws to promote fairness and transparency in the insurance industry.

In contrast, providing accurate policy information, encouraging customers to shop around, and offering free consultations are all practices that serve to empower consumers and enhance their understanding of insurance options. These actions support informed decision-making and promote fair competition among providers.