CALA Settlement Procedures 2 — Questions and Answers
Question 1: When a claimant disputes the adjuster's vehicle damage estimate, what is the most appropriate first step?
- File suit immediately
- Request an independent appraisal (Correct answer)
- Deny the claim outright
- Close the file as unresolved
Correct answer: Request an independent appraisal
Requesting an independent appraisal is the standard dispute resolution mechanism before escalating to litigation.
Question 2: A 'reservation of rights' letter in a settlement context primarily serves to:
- Accelerate payment to the claimant
- Preserve the insurer's right to deny coverage while still investigating (Correct answer)
- Waive subrogation rights
- Confirm total loss status
Correct answer: Preserve the insurer's right to deny coverage while still investigating
A reservation of rights letter allows the insurer to continue investigating without waiving any coverage defenses.
Question 3: Under the Unfair Claims Settlement Practices Act, how many days does an insurer typically have to acknowledge receipt of a claim?
- 5 days
- 10 days (Correct answer)
- 30 days
- 60 days
Correct answer: 10 days
Most state regulations based on the UCSPA require acknowledgment within 10 days of receiving a claim.
Question 4: What does 'accord and satisfaction' mean in automotive loss settlement?
- The insurer agrees to pay a supplemental estimate
- A disputed claim is fully resolved when a claimant cashes a check marked 'payment in full' (Correct answer)
- Both parties agree to binding arbitration
- The repair shop certifies the vehicle is restored to pre-loss condition
Correct answer: A disputed claim is fully resolved when a claimant cashes a check marked 'payment in full'
Accord and satisfaction occurs when a claimant accepts a settlement offer, typically by cashing a check tendered as full payment.
Question 5: Which settlement option allows the insured to keep a totaled vehicle while receiving a reduced payment?
- Agreed value settlement
- Salvage retention by insured (Correct answer)
- Diminished value payout
- Actual cash value waiver
Correct answer: Salvage retention by insured
When an insured retains salvage, the insurer deducts the salvage value from the ACV payment.
Question 6: In a third-party bodily injury settlement, a structured settlement differs from a lump-sum payment in that it:
- Pays immediately but less money
- Distributes payments over time, often for catastrophic injuries (Correct answer)
- Requires court approval for amounts under $10,000
- Eliminates subrogation rights
Correct answer: Distributes payments over time, often for catastrophic injuries
Structured settlements provide periodic payments over time, commonly used in catastrophic or long-term injury cases.
Question 7: When settling a claim involving a minor, what additional step is generally required?
- The minor must sign the release personally
- Court approval of the settlement is typically required (Correct answer)
- A guardian can sign without any court involvement
- The claim must be denied until the minor turns 18
Correct answer: Court approval of the settlement is typically required
Settlements involving minors usually require court approval to protect the minor's legal interests.
CALA Settlement Procedures 2
When a claimant disputes the adjuster's vehicle damage estimate, what is the most appropriate first step?