Practice Test Geeks(CALA) Certified Automotive Loss Adjuster Practice Test
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Settlement Procedures Flashcards

7 cards from real CALA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Settlement Procedures flashcards as text

  1. Diminished value (DV) claims arise because:

    Answer: A vehicle's market resale value is reduced even after a proper repair

    Even after quality repairs, a vehicle's market value may be lower because its accident history is disclosed to future buyers.

  2. An insured's vehicle sustains hail damage totaling $4,800 ACV, with ACV of the vehicle at $5,500. The insurer will most likely:

    Answer: Declare a total loss because repair costs approach or exceed ACV

    When repair costs approach or exceed the vehicle's ACV, declaring a total loss is typically more economical for the insurer.

  3. A settlement involving a Medicare beneficiary may require a Medicare Set-Aside (MSA) arrangement primarily to:

    Answer: Protect Medicare's interests by allocating funds for future injury-related medical costs

    An MSA ensures Medicare is not billed for future injury-related treatment that the settlement funds were intended to cover.

  4. When settling a claim under a policy with stacked uninsured motorist (UM) coverage, the insured can:

    Answer: Combine UM limits across multiple vehicles on the policy for a higher total limit

    Stacked UM coverage allows the insured to multiply the per-vehicle UM limit by the number of vehicles insured under the policy.

  5. An adjuster must apply 'bad faith' standards carefully because bad faith can result in:

    Answer: Extracontractual damages awarded against the insurer beyond policy limits

    Bad faith judgments can expose the insurer to punitive damages and verdicts far exceeding the policy's limits.

  6. Under an 'agreed value' auto policy (as opposed to ACV), a total loss is settled by paying:

    Answer: The amount specifically stated in the policy at inception, without depreciation

    Agreed value policies pay the pre-determined amount stated in the policy, avoiding disputes over depreciation at total loss.

  7. When settling a total loss, the insurer's payment of ACV should reflect:

    Answer: The vehicle's fair market value immediately before the loss, considering age, mileage, and condition

    ACV is the fair market value of the vehicle just before the loss, accounting for depreciation due to age, mileage, and pre-existing condition.