CVA Total Loss Evaluation & Insurance Claims 2 — Questions and Answers
Question 1: What is a 'rebuilt title' and how does it affect a vehicle's appraisal value?
- A title issued after a recall repair; no value impact
- A title issued after a salvage vehicle is repaired and passes state inspection; typically reduces market value 20–40% (Correct answer)
- A title issued for high-mileage vehicles; minor value impact
- A title issued after a voluntary title surrender; moderate impact
Correct answer: A title issued after a salvage vehicle is repaired and passes state inspection; typically reduces market value 20–40%
A rebuilt title is issued to a previously salvaged vehicle that has been repaired and re-inspected, but it carries a permanent stigma reducing market value 20–40%.
Question 2: Which database do CVA appraisers most commonly use to check total loss and title brand history?
- NHTSA Complaints Database
- CARFAX or AutoCheck (Experian) (Correct answer)
- IRS Vehicle Registration Records
- EPA Emissions Database
Correct answer: CARFAX or AutoCheck (Experian)
CARFAX and AutoCheck compile title brand history, odometer records, and reported accident data from state DMVs and insurance companies.
Question 3: An appraiser is asked to value a vehicle for a diminished value claim. What does 'inherent diminished value' mean?
- The loss of value due to poor maintenance history
- The permanent reduction in market value a repaired vehicle suffers solely because of its accident history (Correct answer)
- The reduction in value due to high mileage
- The decline in value caused by a recall affecting the model
Correct answer: The permanent reduction in market value a repaired vehicle suffers solely because of its accident history
Inherent diminished value is the residual loss of market value a vehicle retains even after perfect repair, due solely to its disclosed accident history.
Question 4: In a first-party total loss claim, which party does the CVA appraiser typically represent?
- The at-fault third party's insurer
- The policyholder's own insurance company (Correct answer)
- The state DMV
- The vehicle auction company
Correct answer: The policyholder's own insurance company
In first-party claims, the CVA works for the policyholder's insurer to determine the ACV and resolve the claim under the insured's own policy.
Question 5: What is the primary reason CVA appraisers must document comparable sales when establishing ACV for a total loss?
- To satisfy IRS tax reporting requirements
- To provide market-based evidence supporting the valuation against potential disputes (Correct answer)
- To qualify the vehicle for gap insurance coverage
- To determine the correct sales tax on the replacement vehicle
Correct answer: To provide market-based evidence supporting the valuation against potential disputes
Comparable sales documentation provides objective, market-based evidence for the ACV determination, which is essential if the settlement is disputed.
Question 6: Which factor is LEAST relevant when a CVA establishes ACV for a total loss vehicle?
- Local market conditions and comparable listings
- Vehicle condition at time of loss
- The vehicle's original purchase price (Correct answer)
- Mileage relative to similar vehicles
Correct answer: The vehicle's original purchase price
Original purchase price is irrelevant to ACV because market value is based on current condition, mileage, and comparable sales, not historical cost.
CVA Total Loss Evaluation & Insurance Claims 2
What is a 'rebuilt title' and how does it affect a vehicle's appraisal value?