CAA - Certified Automotive Appraiser Insurance Policies and Regulations Questions and Answers

Question 1

An insurance carrier declares a vehicle a "constructive total loss." What is the primary definition of this term?

Accepted Answer

The cost to repair the vehicle plus its anticipated salvage value equals or exceeds its Actual Cash Value (ACV).

Answer

The vehicle's frame is bent beyond factory specifications, making it structurally unsafe to repair.

Answer

The policyholder has requested to keep the vehicle and receive a partial cash settlement for the damages.

Answer

The damage is so severe that no certified repair facility is willing to attempt the repairs.

Question 2

After an insurance company pays a total loss claim, it typically takes possession of the damaged vehicle. This is an exercise of the insurer's:

Accepted Answer

Right of Salvage

Answer

Duty to Defend

Answer

Principle of Indemnity

Answer

Right of Subrogation

Question 3

A state's legislated Total Loss Threshold is 75%. An appraiser determines a vehicle's pre-accident Actual Cash Value is $20,000. At what minimum estimated repair cost is the insurance company legally required to declare the vehicle a total loss?

Accepted Answer

$15,000

Answer

$12,500

Answer

$17,500

Answer

$20,000

Question 4

An appraiser determines the ACV of a totaled vehicle is $18,000. The owner has an outstanding loan of $21,000. What specific type of insurance coverage is designed to pay the $3,000 difference?

Accepted Answer

Guaranteed Auto Protection (GAP) Insurance

Answer

Comprehensive Coverage

Answer

Underinsured Motorist Property Damage

Answer

Collision Coverage

Question 5

Which of the following best describes a "Like Kind and Quality" (LKQ) part as commonly defined in insurance policies?

Accepted Answer

A used, salvaged part from a vehicle of the same make and model in a condition equal to or better than the part it is replacing.

Answer

A new part manufactured by a company other than the Original Equipment Manufacturer.

Answer

A brand new part ordered directly from the vehicle's original manufacturer.

Answer

A damaged original part that has been repaired and certified by a third-party vendor.

Question 6

A policyholder disputes the Actual Cash Value offered by their insurer for a total loss. The policy contains a provision allowing both parties to hire independent appraisers and, if they cannot agree, to select a neutral umpire whose decision is binding. What is this policy provision called?

Accepted Answer

Appraisal Clause

Answer

Subrogation Clause

Answer

Mediation Agreement

Answer

Betterment Clause