CAIA Claims Investigation Techniques 5 — Questions and Answers
Question 1: An adjuster notes that a claimant's medical bills include treatment dates that fall after the policy's lapse date. How should this affect the claim?
- All medical bills are covered regardless of lapse date
- Treatment received after the policy lapsed is not covered under that policy (Correct answer)
- The adjuster should pay and seek reimbursement later
- The claim should be referred to the state insurance department
Correct answer: Treatment received after the policy lapsed is not covered under that policy
Coverage is limited to the policy period; medical expenses incurred after the policy lapsed are not the insurer's obligation under that contract.
Question 2: Which method of vehicle valuation is most commonly used for total-loss settlement in the United States?
- Kelly Blue Book retail value
- Actual Cash Value (ACV) based on comparable vehicles in the local market (Correct answer)
- Original purchase price minus a flat depreciation rate
- Replacement cost of a new vehicle
Correct answer: Actual Cash Value (ACV) based on comparable vehicles in the local market
ACV reflects the vehicle's market value immediately before the loss, determined by comparing similar vehicles sold in the local market, not retail guides or original purchase price.
Question 3: An adjuster suspects a claimant is fabricating a stolen-parts claim. Which investigative step would most effectively verify whether the parts were legitimately owned?
- Ask the claimant to provide purchase receipts or financial records for the parts (Correct answer)
- Request a police report only
- Accept the claimant's verbal description
- Pay the claim and flag it for audit
Correct answer: Ask the claimant to provide purchase receipts or financial records for the parts
Purchase receipts, bank statements, or installation records establish that the claimant legitimately owned the claimed items and paid documented amounts for them.
Question 4: A third-party claimant disputes the adjuster's liability determination. What is the most appropriate escalation path before litigation?
- Immediately file a declaratory judgment action
- Offer mediation or arbitration to resolve the dispute (Correct answer)
- Ignore the dispute until suit is filed
- Reduce the offer by 50% as a negotiation tactic
Correct answer: Offer mediation or arbitration to resolve the dispute
Mediation and arbitration are cost-effective alternative dispute resolution methods that can resolve liability disagreements without the expense and delay of litigation.
Question 5: When inspecting a vehicle for flood damage as part of a comprehensive claim, which indicator is most definitive?
- Waterline marks and sediment deposits inside the vehicle consistent with submersion (Correct answer)
- Rust on exterior body panels
- Moisture in the spare tire well only
- A strong odor in the trunk
Correct answer: Waterline marks and sediment deposits inside the vehicle consistent with submersion
Consistent waterline staining and sediment inside the passenger compartment, seatbelts, and trunk indicate the vehicle was submerged to a measurable depth.
Question 6: Under the principle of 'indemnity,' how much compensation should a claimant receive for a covered auto loss?
- The full replacement cost of a brand-new vehicle
- The amount that restores them to their pre-loss financial position, no more and no less (Correct answer)
- The policy limit regardless of actual loss
- The repair cost plus a pain-and-suffering multiplier
Correct answer: The amount that restores them to their pre-loss financial position, no more and no less
Indemnity requires that the claimant be made whole — restored to the financial position they were in immediately before the loss — without profiting from the claim.
Question 7: An adjuster is reviewing a diminished value claim after a vehicle was repaired following a collision. Which type of diminished value is most commonly recognized by courts and insurers?
- Inherent diminished value (Correct answer)
- Repair-related diminished value
- Immediate diminished value
- Perceived diminished value
Correct answer: Inherent diminished value
Inherent diminished value is the loss in market value a repaired vehicle suffers simply because it has an accident history, even after a perfect repair.
CAIA Claims Investigation Techniques 5
An adjuster notes that a claimant's medical bills include treatment dates that fall after the policy's lapse date.
How should this affect the claim?