Insurance and Legal Procedures Flashcards

In auto damage estimating, 'betterment' refers to:

Answer: A deduction applied when new parts replace worn components, improving the vehicle beyond its pre-loss condition

Betterment deductions ensure the insured does not receive a financial windfall when new parts replace old, worn ones that had depreciated in value.

Which document establishes the legal obligations between the vehicle owner and the insurer at the time a policy is issued?

Answer: Insurance policy contract

The insurance policy contract is the legally binding agreement that defines coverage, exclusions, duties, and rights of both parties.

A vehicle damaged in a collision is repaired but the owner claims permanent loss in resale value. This concept is known as:

Answer: Diminished value

Diminished value represents the difference between a vehicle's market value before and after an accident, even after repairs are completed.

Under a first-party claim, the claimant is:

Answer: The insured filing a claim against their own policy

A first-party claim involves the policyholder seeking compensation from their own insurer under their own coverage, such as collision or comprehensive.

Which coverage type pays for vehicle damage caused by events such as hail, theft, or flooding?

Answer: Comprehensive coverage

Comprehensive coverage (also called 'other than collision') covers non-collision perils such as weather damage, theft, fire, and animal strikes.

When an insurer settles a total loss claim on a leased vehicle, payment priority typically goes to:

Answer: The leasing company as the titled owner

The leasing company holds title to a leased vehicle and is therefore the primary recipient of total loss settlement proceeds.

Statute of limitations in auto insurance claims refers to:

Answer: The legally mandated deadline by which a lawsuit must be filed after a loss

Statutes of limitations vary by state and claim type, but they set a hard deadline for filing legal action related to an insurance claim.