Total Loss Valuation 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 Total Loss Valuation flashcards as text
What is the primary purpose of obtaining a salvage title after a vehicle is declared a total loss?
Answer: To notify future buyers and the DMV of the vehicle's total loss history
A salvage title brands the vehicle's record to warn future purchasers and regulators that the vehicle was declared a total loss.
When selecting comparable vehicles for ACV calculation, which characteristic is most critical to match?
Answer: Year, make, model, and similar condition/mileage
Effective comparables must share the same year, make, model, and have similar condition and mileage to produce a reliable market value estimate.
A vehicle has a rebuilt title. How does this typically affect its ACV compared to a clean-title equivalent?
Answer: ACV is lower because rebuilt titles carry a market stigma and reduced resale value
Rebuilt title vehicles command lower market prices than clean-title equivalents, so ACV must be adjusted downward to reflect this stigma.
An insured disputes the insurer's ACV calculation. Which option does NOT typically represent a valid dispute resolution mechanism?
Answer: Demanding the insurer use a specific salvage yard
Demanding use of a specific salvage yard is not a recognized ACV dispute mechanism; appraisal, mediation, and litigation are standard avenues.
Which of the following best describes 'actual cash value' under most standard auto policies?
Answer: Replacement cost minus physical depreciation and obsolescence
ACV is generally defined as replacement cost minus depreciation, reflecting what the vehicle was worth in its pre-loss condition.
A total loss occurs on a leased vehicle. To whom does the insurer typically issue the settlement payment?
Answer: The lessor (leasing company) as lienholder/titled owner
On a leased vehicle, the lessor holds title and is the lienholder, so the insurer pays them first up to the ACV amount.
What is the significance of the 'condition report' in total loss valuation?
Answer: It documents pre-loss condition factors that justify positive or negative ACV adjustments
A condition report captures the vehicle's actual pre-loss state—options, mileage, damage, and upkeep—allowing the adjuster to make accurate adjustments to base value.