Insurance Policies and Regulations Flashcards

After a total loss settlement, an insured who wants to keep the vehicle usually receives:

Answer: ACV minus the deductible and the salvage value

When the owner keeps the salvage, the insurer subtracts the salvage value (and any deductible) from the ACV payment.

In most states, what happens to a vehicle's title once it is declared a total loss?

Answer: It is branded as a salvage title (or similar)

State laws generally require a salvage brand on the title of a total-loss vehicle, and a rebuilt brand after it is repaired and inspected.

Which policy condition requires the insured to protect the vehicle from further damage after a loss?

Answer: Duty to mitigate (protect property from further loss)

The duties-after-loss section requires the insured to take reasonable steps to protect the vehicle, and the insurer reimburses reasonable costs.

What does a 'stated amount' auto policy, often used for classic cars, pay on a total loss?

Answer: The lesser of the stated amount or ACV

Stated amount policies pay the lesser of the stated value or ACV, unlike agreed value policies, which pay the agreed amount.

Which coverage pays for damage the insured driver causes to another person's vehicle?

Answer: Property damage liability

Property damage liability pays third parties for damage the insured causes to their property, including their vehicles.

What does a policy's 'other insurance' clause decide?

Answer: How the loss is shared when more than one policy covers it

Other insurance clauses decide primary versus excess or pro-rata responsibility when several policies apply.

Most state regulations require insurers to acknowledge a claim within roughly how long after notice?

Answer: 10 to 15 days

Most states based on the NAIC model require claim acknowledgment within about 10 to 15 working days.