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

Even when the at-fault party is uninsured, the insurer retains the right to pursue a civil judgment to recover paid losses.

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

Salvage proceeds reduce the insurer's net loss, effectively lowering the overall cost of the claim.

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

A waiver of subrogation is a policy endorsement where the insurer agrees not to seek recovery from a named third party after paying a claim.

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

Most states issue a salvage title when repair costs reach 75% or more of the vehicle's actual cash value, though thresholds vary by state.

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

Subrogation prevents unjust enrichment by transferring the insured's recovery rights to the insurer after the insurer pays the loss.

(CAIA) Certified Automotive Insurance Adjuster Practice Test