CAA Total Loss and Diminished Value 5

Question 1

What is the most reliable primary method for determining ACV of a total loss vehicle?

Accepted Answer

Analysis of recent sales or listings of comparable vehicles in the local market

Answer

Local comparable market data best reflects what a replacement vehicle actually costs.

Question 2

When few comparable vehicles exist locally, what is the generally accepted approach?

Accepted Answer

Expand the geographic search radius and adjust for market differences

Answer

Widening the search area with appropriate adjustments preserves a market-based valuation.

Question 3

Which state uses a 60% total loss threshold, one of the lowest in the U.S.?

Accepted Answer

Oklahoma

Answer

Oklahoma totals a vehicle when damage reaches 60% of its value.

Question 4

After paying a total loss, the insurer typically takes ownership of the vehicle and sells it through what channel?

Accepted Answer

A salvage auction

Answer

Insurers recover salvage proceeds by selling totaled vehicles through salvage auctions.

Question 5

An appraiser estimating diminished value on a luxury vehicle with low miles and a repaired unibody would expect:

Accepted Answer

A relatively high diminished value

Answer

Low mileage, high value, and structural repairs all increase diminished value.

CAA - Certified Automotive Appraiser Practice Test