CALA Settlement Procedures 3 — Questions and Answers
Question 1: An adjuster discovers the claimant's vehicle was already damaged prior to the reported accident. The best course of action is to:
- Deny the entire claim without investigation
- Document pre-existing damage separately and settle only for the new loss (Correct answer)
- Pay the full estimate to avoid litigation
- Request a police report and close the file
Correct answer: Document pre-existing damage separately and settle only for the new loss
Adjusters must identify and document pre-existing damage to ensure the settlement covers only the loss attributable to the covered event.
Question 2: What is the purpose of a 'proof of loss' form in the settlement process?
- It authorizes the repair shop to begin work
- It is a sworn statement by the insured detailing the loss and claimed amount (Correct answer)
- It transfers title of a totaled vehicle to the insurer
- It releases all future claims against the insurer
Correct answer: It is a sworn statement by the insured detailing the loss and claimed amount
A proof of loss is a formal, sworn document the insured submits to substantiate the claim amount and circumstances.
Question 3: When a claimant refuses to accept an ACV offer for a total loss, the adjuster should:
- Immediately escalate to litigation
- Explain the ACV calculation methodology and consider obtaining a second valuation (Correct answer)
- Offer to repair the vehicle regardless of cost
- Deduct 20% as a penalty for non-acceptance
Correct answer: Explain the ACV calculation methodology and consider obtaining a second valuation
Transparency about the valuation methodology and willingness to review the calculation helps resolve ACV disputes fairly.
Question 4: A subrogation waiver in a settlement agreement means the insurer:
- Retains the right to recover from the at-fault party
- Gives up its right to pursue recovery from a third party (Correct answer)
- Requires the insured to pursue recovery independently
- Increases the deductible applied to future claims
Correct answer: Gives up its right to pursue recovery from a third party
Waiving subrogation means the insurer forfeits its right to recover the paid claim amount from the responsible third party.
Question 5: Which document formally transfers ownership of a total-loss vehicle to the insurer?
- Proof of loss form
- Title assignment or certificate of title (Correct answer)
- Release of liability
- Authorization to repair
Correct answer: Title assignment or certificate of title
The certificate of title, properly assigned, transfers vehicle ownership to the insurer as part of the total loss settlement.
Question 6: An insured has a $500 collision deductible. The repair estimate is $3,200. How much does the insurer pay the shop?
- $3,200
- $2,700 (Correct answer)
- $3,700
- $500
Correct answer: $2,700
The insurer pays the repair cost minus the deductible: $3,200 − $500 = $2,700.
Question 7: What is 'betterment' in the context of automotive claim settlements?
- A bonus paid when the vehicle is repaired faster than estimated
- A deduction applied when new parts replace worn components, improving the vehicle's condition beyond pre-loss state (Correct answer)
- An upgrade the insured must pay to receive OEM parts
- A surcharge for luxury vehicle repairs
Correct answer: A deduction applied when new parts replace worn components, improving the vehicle's condition beyond pre-loss state
Betterment deductions prevent the insured from profiting from a claim by receiving brand-new parts that replace significantly worn ones.
CALA Settlement Procedures 3
An adjuster discovers the claimant's vehicle was already damaged prior to the reported accident.
The best course of action is to: