CAIA Subrogation and Salvage 2

Question 1

An insured's vehicle is totaled after being struck by an uninsured driver. The insurer pays the claim. Which subrogation option is available?

Accepted Answer

Insurer can pursue a civil judgment against the at-fault uninsured driver

Answer

Insurer cannot subrogate against an uninsured motorist

Answer

Insurer must waive the claim due to the driver's uninsured status

Answer

Insurer must split recovery costs with the insured

Question 2

When a salvage vehicle is sold at auction, how are the proceeds typically applied?

Accepted Answer

Applied to reduce the insurer's net loss on the claim

Answer

Returned entirely to the insured as a bonus

Answer

Divided equally between insured and insurer

Answer

Deposited into a state salvage fund

Question 3

What is 'waiver of subrogation' in the context of an auto insurance policy?

Accepted Answer

A policy provision where the insurer gives up its right to recover from a specified third party

Answer

The insured's agreement to pursue the at-fault party independently

Answer

A clause that eliminates collision coverage

Answer

A requirement that the insured return any settlement received

Question 4

A salvage title is typically issued when a vehicle's repair cost exceeds what threshold compared to its ACV?

Accepted Answer

75% or more

Answer

25%

Answer

50%

Answer

100%

Question 5

Which principle prevents the insured from collecting more than their actual loss through both insurance payment and third-party recovery combined?

Accepted Answer

Subrogation

Answer

Contribution

Answer

Indemnity

Answer

Pro rata liability

Question 6

If an insured settles directly with the at-fault party without the insurer's consent after the insurer has already paid the claim, what consequence may follow?

Accepted Answer

The insured may be required to reimburse the insurer for the amount recovered

Answer

The insurer must honor the settlement and release its subrogation rights

Answer

The at-fault party is released from all further liability

Answer

The insurer can only recover from the state insurance guaranty fund

Question 7

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?

Accepted Answer

$15,500

Answer

$18,000

Answer

$20,500

Answer

$2,500