CALA - Certified Automotive Loss Adjuster Insurance Policy and Regulations Questions and Answers

Question 1

An insured's vehicle has an Actual Cash Value (ACV) of $10,000. The cost to repair the damages is $7,000, and the salvage value is $3,500. In a state that uses the Total Loss Formula (TLF), how should the adjuster classify this claim?

Accepted Answer

As a total loss, because the repair cost plus the salvage value is greater than the ACV.

Answer

States using the Total Loss Formula (TLF) determine a total loss when the cost of repairs plus the salvage value equals or exceeds the vehicle's Actual Cash Value (ACV). In this scenario, $7,000 (repairs) + $3,500 (salvage) = $10,500, which is greater than the $10,000 ACV. Therefore, the vehicle must be declared a total loss.

Question 2

Which of the following actions by an adjuster would most likely be considered an Unfair Claims Settlement Practice according to the model act created by the National Association of Insurance Commissioners (NAIC)?

Accepted Answer

Failing to acknowledge pertinent communications regarding a claim within a reasonable time.

Answer

The Unfair Claims Settlement Practices Act (UCSPA), a model law by the NAIC, explicitly lists failing to act promptly upon communications related to claims as an unfair practice. The other options are standard and acceptable practices in the claims adjustment process.

Question 3

A policyholder has a standard auto policy but uses their vehicle to drive for a ridesharing service. They get into an accident while logged into the rideshare app but before accepting a ride. To ensure coverage for this specific situation, what is typically required?

Accepted Answer

A ridesharing endorsement.

Answer

A standard personal auto policy typically excludes coverage when the vehicle is used for commercial purposes like ridesharing. A ridesharing endorsement, also known as a rider, is a specific addition to a personal auto policy that fills this coverage gap, providing protection during the period the driver is logged into the app but has not yet accepted a ride.

Question 4

A loss adjuster is handling a claim in a state with a 75% total loss threshold. The vehicle's ACV is determined to be $20,000. At what estimated repair cost must the adjuster declare the vehicle a total loss?

Accepted Answer

$15,000 or more

Answer

In states with a percentage-based total loss threshold, a vehicle is declared a total loss if the cost of repairs exceeds that percentage of the car's ACV. In this case, 75% of $20,000 is $15,000. Therefore, if the repair estimate is $15,000 or higher, the vehicle is considered a total loss.

Question 5

An insurer advises a third-party claimant with clear liability against their insured to file the claim under the claimant's own collision coverage to avoid paying the claim. According to most state regulations based on the NAIC model act, this practice is:

Accepted Answer

Considered an unfair claims practice.

Answer

The NAIC's Unfair Claims Settlement Practices Act and regulations adopted by many states specify that insurers shall not recommend that third-party claimants make a claim under their own policies solely to avoid paying claims where liability and damages are reasonably clear. This is considered an act of bad faith.

(CALA) Certified Automotive Loss Adjuster Practice Test

(CALA) Certified Automotive Loss Adjuster Practice Test

CALA - Certified Automotive Loss Adjuster Insurance Policy and Regulations Questions and Answers