CALA Claims Processing & Documentation 5 — Questions and Answers
Question 1: In a multi-vehicle accident claim, the adjuster determines that fault is shared 30% with the insured. In a pure comparative negligence state, the insured's recovery would be:
- Barred entirely due to shared fault
- Reduced by 30% from the total damages (Correct answer)
- Reduced by 70% from the total damages
- Paid in full since the insured is less than 50% at fault
Correct answer: Reduced by 30% from the total damages
In pure comparative negligence states, the claimant's recovery is reduced proportionally by their percentage of fault.
Question 2: What is the purpose of a 'reservation of rights' when processing a claim under a policy with a potential coverage exclusion?
- To deny the claim immediately
- To notify the insured that coverage may be limited while investigation continues (Correct answer)
- To extend the claim investigation period indefinitely
- To require the insured to pay a higher deductible
Correct answer: To notify the insured that coverage may be limited while investigation continues
A reservation of rights letter notifies the insured of potential coverage issues while allowing the investigation to proceed, preserving the insurer's right to deny later.
Question 3: When an adjuster discovers that a claimant's recorded statement contradicts physical evidence at the scene, the correct action is to:
- Accept the statement as the primary source of truth
- Document the inconsistencies and flag the claim for special investigation (Correct answer)
- Immediately deny the claim without further investigation
- Discard the recorded statement and rely solely on physical evidence
Correct answer: Document the inconsistencies and flag the claim for special investigation
Inconsistencies between statements and evidence should be documented and referred to the Special Investigations Unit (SIU) for potential fraud review.
Question 4: Which of the following best describes the 'diminished value' concept in automotive claims?
- The reduction in repair estimate after applying depreciation
- The decrease in a vehicle's market value after being repaired from an accident (Correct answer)
- The difference between ACV and replacement cost
- The salvage value deducted from a total loss payment
Correct answer: The decrease in a vehicle's market value after being repaired from an accident
Diminished value refers to the loss in market value a vehicle sustains even after quality repairs, because buyers pay less for accident-history vehicles.
Question 5: A statute of limitations for an auto insurance claim typically begins running from:
- The date the policy was issued
- The date the loss occurred (Correct answer)
- The date the claim was denied
- The date the repair was completed
Correct answer: The date the loss occurred
The statute of limitations for property damage claims generally begins on the date the loss occurred, varying by state law.
Question 6: An insured's vehicle is stolen and later recovered with $8,000 in damage. The ACV before theft was $14,000. The deductible is $500. What is the insurer's payment obligation?
- $14,000 minus the deductible
- $8,000 only since the car was recovered
- $7,500 for the damage minus the deductible (Correct answer)
- Nothing since the car was recovered
Correct answer: $7,500 for the damage minus the deductible
When a stolen vehicle is recovered with damage, comprehensive coverage pays for the repair costs minus the deductible, not the full ACV.
Question 7: Which element is NOT typically required in a complete claims file documentation package?
- Photos of all vehicle damage
- Recorded or written statement from the insured
- The adjuster's personal investment portfolio (Correct answer)
- Police or accident report when available
Correct answer: The adjuster's personal investment portfolio
A claims file requires evidence, statements, and reports related to the loss — personal financial information about the adjuster has no place in claims documentation.
CALA Claims Processing & Documentation 5
In a multi-vehicle accident claim, the adjuster determines that fault is shared 30% with the insured.
In a pure comparative negligence state, the insured's recovery would be: