Texas Funeral Prearrangement License Exam 2026 - Free Practice Questions and Study Guide

The correct answer is defamation because making a false statement about another company's solvency can harm that company's reputation. Defamation refers specifically to the act of damaging someone's reputation through false statements, which can manifest as either slander (spoken) or libel (written). In the context of insurance companies, falsely claiming that a competitor is not solvent can mislead consumers and impact the competitor's business significantly.

Negligence refers to the failure to take reasonable care to avoid causing injury or loss to another person, but it does not specifically address the act of making false statements. Fraud involves intentional deception to secure unfair or unlawful gain, which is broader than just making a statement about solvency and typically includes a more comprehensive scheme. Misrepresentation concerns providing false information, but it does not specifically denote harm to reputation, which is critical in this scenario. Hence, defamation is the most accurate term for describing the consequences of making such false statements about another company.