CAADE Insurance and Legal Procedures 3

Question 1

In auto damage estimating, 'betterment' refers to:

Accepted Answer

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

Answer

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

Question 2

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

Accepted Answer

Insurance policy contract

Answer

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

Question 3

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

Accepted Answer

Diminished value

Answer

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

Question 4

Under a first-party claim, the claimant is:

Accepted Answer

The insured filing a claim against their own policy

Answer

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

Question 5

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

Accepted Answer

Comprehensive coverage

Answer

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

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

CAADE Insurance and Legal Procedures 3