Mixed Deck — All CAIA Topics Flashcards

Which coverage applies when the insured is struck by a driver who has liability insurance, but those limits are less than the insured's damages?

Answer: Underinsured Motorist (UIM) coverage

Underinsured motorist (UIM) coverage applies when the at-fault driver carries liability insurance but those limits are insufficient to fully compensate the injured insured for their losses.

A vehicle deemed a total loss is sold to a salvage yard for $2,500. The insurer paid the insured $18,000 ACV. What is the insurer's net loss?

Answer: $15,500

The insurer's net loss is the claim paid minus salvage proceeds: $18,000 − $2,500 = $15,500.

An adjuster notes corrosion along the lower rocker panel that existed before the covered loss. How should this be handled in the estimate?

Answer: Exclude pre-existing corrosion and betterment the repair cost accordingly

Pre-existing corrosion is not covered by the current loss; the adjuster must exclude or apply betterment to the portion of repair attributable to prior deterioration.

An adjuster is handling a claim in a comparative negligence state where the insured is found 40% at fault. How is the insured's recovery affected?

Answer: The insured's recovery is reduced by 40%

Under comparative negligence, each party's recovery is reduced in proportion to their percentage of fault.

An adjuster notices the claimant's medical bills were submitted from a clinic that opened one week after the reported accident. This is most indicative of:

Answer: Possible medical billing fraud

A medical facility opening immediately before or after an accident and submitting related bills is a strong indicator of fraudulent billing schemes.

An adjuster is assessing a convertible with damage to the soft top mechanism. Which consideration is most important when estimating repairs?

Answer: The complexity of the folding mechanism and whether electronic components are damaged

Convertible soft top mechanisms can include motors, hydraulics, linkages, and sensors — all of which must be assessed to produce an accurate repair estimate.

A claimant experienced emotional distress and anxiety following a serious auto accident but had no physical injuries. Can these be compensable damages?

Answer: Yes, many states allow recovery for emotional distress, especially when accompanied by a physical impact

Most states allow emotional distress claims when tied to a physical impact or when the distress is severe and documented, though rules vary by jurisdiction.

An adjuster is determining the Actual Cash Value (ACV) for a total loss vehicle. Which of the following is the PRIMARY basis for this valuation?

Answer: The listed prices of comparable vehicles for sale in the claimant's local market.

The foundation of an ACV determination is a comparable vehicle analysis. Insurers are required to base the settlement on the cost of a 'comparable automobile' by analyzing recent listings and sales of similar vehicles in the local geographic area to determine fair market value.

A shop requests additional labor time for accessing a door intrusion beam during repairs. How should an adjuster evaluate this request?

Answer: Research whether the estimating database includes or excludes this operation

The adjuster must verify whether the estimating system includes or excludes intrusion beam access labor to determine if the additional time is justified.

Which organization publishes the standard procedures that define proper collision repair methods for insurance and shop use?

Answer: I-CAR (Inter-Industry Conference on Auto Collision Repair)

I-CAR establishes and publishes inter-industry repair procedures and training standards used by both collision repair shops and insurance carriers.

Which of the following is a red flag that may indicate an auto insurance fraud ring rather than a single isolated claim?

Answer: Multiple unrelated claimants using the same attorney and treatment facility

Fraud rings coordinate participants to use the same legal and medical providers, creating a detectable pattern when multiple claims are cross-referenced.

If a claimant signs a release and later discovers additional injuries, can they typically re-open the claim?

Answer: Generally no, because a properly executed release extinguishes all claims, known and unknown, unless fraud or mistake is proven

A signed release is generally a final resolution of all claims from an incident; re-opening a claim is only possible in cases of fraud, mutual mistake, or when specifically excluded injuries are later discovered.

A claimant's attorney sends a demand letter with a policy-limits settlement offer and a 30-day deadline. Ignoring this deadline without justification could expose the insurer to what liability?

Answer: Bad faith liability exceeding policy limits

Failing to respond to a reasonable policy-limits demand within the deadline can constitute bad faith, exposing the insurer to liability beyond policy limits.

While inspecting a damaged vehicle at a tow yard, an adjuster finds a folder on the passenger seat containing the claimant's sensitive medical records and financial statements. What is the adjuster's most appropriate ethical and regulatory responsibility regarding this information?

Answer: Secure the documents if possible and promptly notify the claimant about their discovery to arrange for their return.

Adjusters have an ethical and legal duty to respect a claimant's privacy and protect their personal information, which is governed by laws like the Driver's Privacy Protection Act (DPPA). Reviewing, photographing, or leaving sensitive personal information unsecured is a breach of privacy. The correct action is to secure the information and inform the owner, demonstrating professionalism and respect for the claimant's privacy.

Which of the following is NOT a standard factor used to adjust comparable vehicle values in a total loss appraisal?

Answer: Color preference of the insured

Color is generally not a recognized adjustment factor in professional total loss valuations because it has negligible market impact for most vehicles.

During a supplement inspection, a technician discovers hidden damage to the radiator core support not visible during the initial estimate. What is the correct procedure?

Answer: Issue a supplement to cover the newly discovered damage

Supplements are issued when additional damage is discovered during teardown that was not visible or accessible during the initial inspection.

A state insurance department sends an examiner to audit a claims file. Which adjuster behavior would most likely be cited as a violation?

Answer: Routinely denying claims without a written explanation

Denying claims without written explanation of the basis violates UCSPA requirements in virtually every state.

In a dram shop liability scenario involving an auto accident, who may be held liable in addition to the at-fault driver?

Answer: The establishment that served alcohol to the visibly intoxicated driver

Dram shop laws in many states impose liability on bars or restaurants that serve alcohol to a visibly intoxicated person who then causes an accident.

A claimant's policy provides for a rental car during the 'reasonable repair period.' To minimize costs, the adjuster knowingly tells the claimant that the policy has a strict, non-negotiable '5-day limit' on rentals, even though the policy has no such specific limit and the repairs will take ten days. This action is an example of:

Answer: Misrepresenting policy provisions.

Intentionally misstating policy facts, coverages, or provisions to a claimant to reduce a settlement is a prohibited Unfair Claims Settlement Practice known as misrepresentation. The adjuster has an ethical and regulatory duty to explain policy benefits truthfully and not deprive the insured of benefits they are entitled to under the contract.

A claimant's treating physician states the injuries are 'consistent with' the reported accident. What does this phrase mean in bodily injury evaluation?

Answer: The medical findings do not contradict accident causation, though the physician is not giving absolute certainty

'Consistent with' means the medical evidence is compatible with the claimed mechanism but does not constitute absolute proof of causation.