CAADE Insurance and Legal Procedures 5

Question 1

GAP insurance covers the difference between a vehicle's ACV and:

Accepted Answer

The outstanding loan or lease balance

Answer

GAP (Guaranteed Asset Protection) insurance pays the shortfall between what the insurer pays (ACV) and what the owner still owes on the loan or lease.

Question 2

A vehicle title branded as 'salvage' indicates:

Accepted Answer

The vehicle was declared a total loss by an insurer at some point

Answer

A salvage title is issued when an insurance company declares a vehicle a total loss due to damage, theft recovery, or other qualifying event.

Question 3

An insured has a $1,000 collision deductible. If total repairs cost $4,200, the insurer pays:

Accepted Answer

$3,200

Answer

The insurer pays total repair costs minus the deductible, so $4,200 − $1,000 = $3,200.

Question 4

Which legal concept prevents an insurer from denying coverage based on a policy exclusion if it failed to clearly communicate that exclusion to the policyholder?

Accepted Answer

Waiver and estoppel

Answer

Under waiver and estoppel, an insurer that fails to timely assert an exclusion or misrepresents coverage may be legally prevented from later denying the claim on that basis.

Question 5

A vehicle appraisal report used in a legal proceeding must meet the evidentiary standard of being:

Accepted Answer

Prepared by a qualified expert using accepted industry methodologies

Answer

For an appraisal to be admissible in court, it must be authored by a qualified expert who applied recognized and reliable valuation methods.

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

(CAADE) Certified Automotive Appraisal and Damage Estimator Practice Test

CAADE Insurance and Legal Procedures 5