Total Loss Valuation Flashcards
7 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 7 Total Loss Valuation flashcards as text
Which service is commonly used by insurance adjusters to obtain computerized market valuations for total loss vehicles?
Answer: Mitchell, CCC, or Audatex valuation platforms
CCC ONE, Mitchell, and Audatex are industry-standard platforms that generate ACV reports using comparable sales data.
When a total loss vehicle has aftermarket accessories installed by the owner, how should an adjuster handle their value?
Answer: Evaluate their contribution to market value and adjust accordingly
Aftermarket accessories are valued based on how much they actually increase the vehicle's market value, not necessarily their purchase price.
What is the purpose of a 'prior damage' deduction in total loss valuation?
Answer: To reduce ACV for unrelated pre-existing damage not caused by the covered loss
Prior damage deductions adjust ACV downward to reflect damage the insurer is not responsible for under the current claim.
A vehicle's title is branded 'flood' from a prior event. How does this typically affect total loss ACV?
Answer: ACV decreases because branded titles reduce market value
Branded titles (flood, salvage, etc.) significantly reduce a vehicle's market value because buyers discount these vehicles heavily.
Which document must the insurer typically obtain from the insured to transfer ownership of a totaled vehicle?
Answer: A signed title/certificate of title
The insurer requires a signed title transfer to take ownership of the salvage vehicle before reselling it.
What role does a lienholder play in a total loss settlement when the insured has an outstanding auto loan?
Answer: The lienholder's interest is paid first, with any remaining funds going to the insured
In a total loss claim, the insurer pays the lienholder up to the outstanding loan balance, with any excess going to the insured.
A vehicle declared a total loss has a loan balance of $15,000 but an ACV of $11,000. What coverage would close this $4,000 gap?
Answer: Gap insurance (loan/lease payoff coverage)
Gap insurance covers the difference between the ACV settlement and the outstanding loan or lease balance when the loan exceeds the vehicle's value.