CCA CCA Auto and Property Claims 2 — Questions and Answers
Question 1: What is 'replacement cost value' (RCV) coverage?
- Coverage that pays only the depreciated value of damaged property
- Coverage that pays the cost to replace damaged property with new property of like kind and quality, without deducting for depreciation (Correct answer)
- Coverage limited to the amount the insured paid for the property originally
- Coverage that pays only the salvage value of destroyed items
Correct answer: Coverage that pays the cost to replace damaged property with new property of like kind and quality, without deducting for depreciation
Replacement cost value pays what it actually costs to replace the damaged item with a new equivalent, without subtracting depreciation.
Question 2: In an auto claim, 'diminished value' refers to:
- Depreciation applied to the total loss settlement
- The reduction in a vehicle's market value after being repaired following an accident (Correct answer)
- The deductible amount subtracted from the claim payment
- The cost difference between OEM and aftermarket parts
Correct answer: The reduction in a vehicle's market value after being repaired following an accident
Diminished value is the difference between a vehicle's pre-accident market value and its post-repair market value, since a repaired vehicle often sells for less.
Question 3: An insured's home suffers a covered fire loss. The adjuster must complete a proof of loss. What is the purpose of this document?
- To cancel the policy after a major loss
- To formally document the insured's claim and the amount of the loss for the insurer's records (Correct answer)
- To transfer ownership of the damaged property to the insurer
- To establish the insured's premium for the next policy term
Correct answer: To formally document the insured's claim and the amount of the loss for the insurer's records
A proof of loss is a sworn statement by the insured detailing the circumstances of the loss and the amount claimed, required by most policies before payment.
Question 4: What does 'subrogation waiver endorsement' do in a property policy?
- It eliminates the deductible for subrogated claims
- It prevents the insurer from pursuing recovery against a specified third party (Correct answer)
- It increases the policy limits for subrogated losses
- It transfers subrogation rights to the insured
Correct answer: It prevents the insurer from pursuing recovery against a specified third party
A subrogation waiver endorsement removes the insurer's right to recover from a named party, often required when tenants or contractors agree to waive claims against each other.
Question 5: A homeowner files a claim for personal property destroyed in a fire. The insurer uses a 'contents schedule' to evaluate the claim. What does this typically include?
- Only items specifically listed on the policy at inception
- An itemized list of damaged or destroyed belongings with descriptions, ages, and values (Correct answer)
- The structural inventory of the home's building components
- A list of all prior claims filed on the policy
Correct answer: An itemized list of damaged or destroyed belongings with descriptions, ages, and values
A contents schedule documents personal property items with their descriptions, ages, original costs, and estimated replacement values to support the claim settlement.
Question 6: Which type of auto coverage pays for the insured's own vehicle damage regardless of fault?
- Bodily injury liability
- Property damage liability
- Collision coverage (Correct answer)
- Medical payments coverage
Correct answer: Collision coverage
Collision coverage pays for the insured's own vehicle damage caused by a collision, regardless of who was at fault in the accident.
CCA CCA Auto and Property Claims 2
What is 'replacement cost value' (RCV) coverage?