CAA Total Loss and Diminished Value 2

Question 1

Under a total loss formula (TLF) state, a vehicle is declared a total loss when which condition is met?

Accepted Answer

Cost of repair plus salvage value equals or exceeds the actual cash value

Answer

TLF states compare repair cost plus salvage value against the pre-loss ACV.

Question 2

A vehicle has an ACV of $20,000, a repair estimate of $13,500, and a salvage bid of $7,000. Under a total loss formula, what is the result?

Accepted Answer

Total loss, because $20,500 exceeds the $20,000 ACV

Answer

$13,500 + $7,000 = $20,500, which exceeds the $20,000 ACV.

Question 3

Which state uses a 100% total loss threshold, meaning repairs must equal or exceed ACV before a vehicle is totaled?

Accepted Answer

Texas

Answer

Texas uses a 100% threshold, while Florida is 80%, Iowa 70%, and Oklahoma 60%.

Question 4

When an owner keeps a totaled vehicle (owner-retained salvage), how is the settlement typically calculated?

Accepted Answer

ACV minus the salvage value and any deductible

Answer

The insurer deducts the salvage value it would have recovered, along with the deductible.

Question 5

In a comparable-vehicle valuation report, why are adjustments made to comparables?

Accepted Answer

To account for differences in mileage, options, and condition versus the loss vehicle

Answer

Adjustments align each comparable with the loss vehicle's specific attributes.

CAA - Certified Automotive Appraiser Practice Test