Damage Evaluation and Settlement Procedures Flashcards
7 cards from real CCA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Damage Evaluation and Settlement Procedures flashcards as text
A claimant alleges diminished value of a vehicle after repairs following a collision. What does 'inherent diminished value' specifically mean?
Answer: The residual reduction in a vehicle's market value that persists even after quality repairs due to its accident history
Inherent diminished value is the permanent reduction in a vehicle's resale value caused solely by its accident history, even when repairs are performed perfectly.
When evaluating economic damages in a bodily injury claim, which category compensates for the claimant's inability to perform household chores, childcare, and similar domestic services?
Answer: Loss of household services
Loss of household services compensates injured claimants for their inability to perform domestic tasks they normally provided, valued at the market cost of hiring replacements.
Which statute governs the time within which a claimant must file a lawsuit after a cause of action arises, and what happens if this deadline is missed?
Answer: Statute of limitations — the claimant loses the right to sue after the deadline
The statute of limitations sets the deadline for filing suit; claims filed after this period are time-barred and the court will typically dismiss them.
In a large loss scenario, an adjuster recommends using a forensic accountant. What is the primary purpose of this professional in the claims process?
Answer: To analyze financial records and quantify economic losses such as business income or fraud-related claims
A forensic accountant examines financial records to quantify complex economic losses in claims involving business interruption, fraud investigation, or large commercial losses.
A claimant in a third-party liability claim has medical bills totaling $50,000 but demands $200,000 to settle. Which technique should an adjuster use to evaluate the reasonableness of this settlement demand?
Answer: Use a damages evaluation method comparing special damages, general damages, and liability exposure to assess the demand's reasonableness
Adjusters evaluate demands by analyzing special damages (economic losses), general damages (pain and suffering multipliers), and liability factors to determine a reasonable settlement range.
Under the 'made whole' doctrine, what restriction applies to the insurer's subrogation rights against a negligent third party?
Answer: The insurer may not pursue subrogation until the insured has been fully compensated for all their losses
The made whole doctrine holds that an insurer's subrogation rights are subordinate to the insured's recovery — the insured must be fully compensated for all losses before the insurer can recoup its payment.
When a covered building loss involves ordinance or law compliance upgrades required by local building codes, which additional coverage is needed to pay for these mandated improvements?
Answer: Ordinance or law coverage
Ordinance or law coverage pays the increased cost of construction required to bring a damaged building into compliance with current building codes, which standard property policies exclude.