Rental Reimbursement and Diminished Value Claims Flashcards
6 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Rental Reimbursement and Diminished Value Claims flashcards as text
A claimant's vehicle is undriveable after a covered collision. How should the adjuster handle the rental while liability is still being investigated?
Answer: Authorize rental under the liability claim with a reservation of rights if liability is disputed
Best practice is to provide rental transportation under a reservation of rights when liability is disputed, avoiding bad faith exposure while protecting the insurer's position.
Repair-related diminished value refers to:
Answer: Value lost because repairs were improperly performed or incomplete
Repair-related diminished value results from substandard repairs that leave the vehicle in a worse condition than before the accident.
Which factor most significantly reduces a third-party diminished value claim's validity?
Answer: The vehicle is over 100,000 miles and more than 7 years old
High-mileage, older vehicles have minimal market value loss from accident history because buyers in that market segment prioritize price over accident records.
When a claimant disputes the insurer's DV calculation, the dispute is most often resolved through:
Answer: Appraisal clause invocation, mediation, or litigation depending on the policy and state law
DV disputes are typically resolved through the policy's appraisal process, private mediation, or civil litigation, with the applicable method depending on the policy language and jurisdiction.
In some states, failing to proactively disclose to a claimant that they may be entitled to diminished value could expose the insurer to:
Answer: Bad faith claims handling allegations
In states where DV is an owed damage, failure to inform claimants of their rights may be considered an unfair claims settlement practice and give rise to bad faith liability.
A storage facility charges the claimant $75/day while the insurer investigates a total loss. Who bears this cost?
Answer: The at-fault insurer, as storage is a reasonable consequence of the covered loss
Storage fees that accrue while a covered vehicle is awaiting inspection or a total loss decision are part of the loss and are the responsibility of the at-fault insurer.