CALA Total Loss Valuation 2

Question 1

A vehicle has prior unrepaired damage totaling $1,200. How should this affect the actual cash value (ACV) calculation?

Accepted Answer

The ACV is reduced by the cost to repair the prior damage

Answer

Prior unrepaired damage reduces a vehicle's ACV because the vehicle was already in a diminished condition at the time of the loss.

Question 2

Which valuation method uses recent sales of comparable vehicles in the same geographic region to establish ACV?

Accepted Answer

Market data approach

Answer

The market data approach establishes ACV by analyzing actual transaction prices of comparable vehicles sold in the local market.

Question 3

A total loss vehicle has an outstanding loan balance of $18,000 but an ACV of $14,000. What amount does the insurer typically pay the policyholder?

Accepted Answer

$14,000 minus any applicable deductible

Answer

The insurer pays ACV minus the deductible; the gap between the loan balance and ACV is the insured's (or GAP insurance's) responsibility.

Question 4

What does the term 'book value' refer to in the context of total loss valuation?

Accepted Answer

Published guide values such as those from NADA or Black Book

Answer

Book value refers to values published by industry guides like NADA, Black Book, or Kelley Blue Book, which are often used as one reference point for ACV.

Question 5

An adjuster identifies three comparable vehicles but one comp is located 300 miles away in a different market. What is the best practice?

Accepted Answer

Apply a geographic market adjustment to the comp

Answer

When a comparable vehicle is outside the local market area, a geographic adjustment should be applied to reflect regional price differences.

(CALA) Certified Automotive Loss Adjuster Practice Test

(CALA) Certified Automotive Loss Adjuster Practice Test

CALA Total Loss Valuation 2