CAIA Subrogation and Salvage 4

Question 1

Which party typically handles the sale of salvage vehicles on behalf of the insurer?

Accepted Answer

A licensed salvage auction company

Answer

Insurers commonly use licensed salvage auction companies to maximize recovery from the sale of totaled vehicles.

Question 2

Under what circumstance may an insurer be required to pursue subrogation on behalf of the insured even if the insurer does not want to?

Accepted Answer

When the insured demands it and state law requires the insurer to do so

Answer

Some states require insurers to pursue subrogation at the insured's request, particularly when significant unrecovered losses remain.

Question 3

A vehicle has an ACV of $10,000 and repair costs of $7,800. The salvage value is $2,500. Should the adjuster declare it a total loss?

Accepted Answer

Yes, because repair costs plus salvage value exceed ACV

Answer

When repair costs ($7,800) plus salvage value ($2,500) equal or exceed ACV ($10,000), a total loss declaration is economically justified.

Question 4

What is a 'keeper vehicle' in the context of automotive total loss claims?

Accepted Answer

A totaled vehicle the insured chooses to keep by accepting a reduced settlement

Answer

A keeper vehicle is one the insured elects to retain after a total loss; the settlement is reduced by the salvage value since the insured keeps the vehicle.

Question 5

What happens to the insurer's subrogation rights if the statute of limitations expires before the insurer files suit against the at-fault party?

Accepted Answer

The subrogation claim is barred and the insurer loses its right to recover

Answer

If the insurer fails to file a subrogation action before the statute of limitations expires, the right to recover is permanently lost.

(CAIA) Certified Automotive Insurance Adjuster Practice Test

(CAIA) Certified Automotive Insurance Adjuster Practice Test

CAIA Subrogation and Salvage 4