CALA Claims Investigation Process 4

Question 1

Which of the following best describes 'actual cash value' (ACV) in automotive loss adjustment?

Accepted Answer

Replacement cost minus depreciation, reflecting current market value

Answer

ACV represents what a vehicle was worth immediately before the loss, calculated as replacement cost minus depreciation.

Question 2

An adjuster receives a repair estimate that includes 'betterment' charges. What does this mean for the settlement?

Accepted Answer

The insured may be required to contribute toward parts that improve the vehicle beyond its pre-loss condition

Answer

Betterment allows the insurer to share costs with the insured when new parts replace worn components, preventing the insured from profiting from the loss.

Question 3

What is the 'indemnity principle' as it applies to auto claims?

Accepted Answer

The insured should be restored to the same financial position as before the loss, no better or worse

Answer

The indemnity principle ensures insurance compensates for actual loss without enriching the insured beyond their pre-loss financial position.

Question 4

During investigation, an adjuster discovers the vehicle's odometer was rolled back before the loss. This finding primarily affects:

Accepted Answer

The vehicle's ACV since mileage directly impacts market value

Answer

Odometer rollback is fraud that inflates ACV; correcting the true mileage reduces the vehicle's pre-loss market value.

Question 5

When investigating a vehicle fire loss, which initial resource provides the most objective information about the fire's origin and cause?

Accepted Answer

The fire department report and fire investigator's findings

Answer

Fire department reports and certified fire investigator findings provide expert, contemporaneous documentation of fire origin and cause.

(CALA) Certified Automotive Loss Adjuster Practice Test

(CALA) Certified Automotive Loss Adjuster Practice Test

CALA Claims Investigation Process 4