CAIA Total Loss Valuation 2

Question 1

A vehicle is declared a total loss when repair costs exceed what percentage of the actual cash value (ACV) in most US states?

Accepted Answer

80%

Answer

Most states use a threshold of 75–80% of ACV, with 80% being the most common statutory total-loss threshold.

Question 2

Which valuation method uses recent sale prices of comparable vehicles in the same geographic market to determine ACV?

Accepted Answer

Comparable sales method

Answer

The comparable sales method establishes ACV by analyzing actual transaction prices of similar vehicles sold locally.

Question 3

When adjusting a comparable vehicle's value, which factor would INCREASE the subject vehicle's ACV?

Accepted Answer

The comparable has lower mileage than the subject

Answer

If the comparable has lower mileage, it is worth more; therefore the subject's ACV is adjusted downward from the comparable's price — but relative to the comparable, lower mileage on the comp means the subject is worse, reducing ACV.

Question 4

What is a 'salvage value' in the context of total loss settlement?

Accepted Answer

The amount the insurer receives by selling the wrecked vehicle

Answer

Salvage value is the proceeds the insurer obtains from selling the totaled vehicle to a salvage buyer or auction.

Question 5

An insured retains their totaled vehicle for parts. How does this typically affect the settlement?

Accepted Answer

The insurer deducts the salvage value from the ACV settlement

Answer

When an insured retains the salvage, the insurer deducts the salvage value from the ACV payment because the insurer no longer receives those proceeds.

(CAIA) Certified Automotive Insurance Adjuster Practice Test

(CAIA) Certified Automotive Insurance Adjuster Practice Test

CAIA Total Loss Valuation 2