Total Loss and Diminished Value Flashcards

What is the most reliable primary method for determining ACV of a total loss vehicle?

Answer: Analysis of recent sales or listings of comparable vehicles in the local market

Local comparable market data best reflects what a replacement vehicle actually costs.

When few comparable vehicles exist locally, what is the generally accepted approach?

Answer: Expand the geographic search radius and adjust for market differences

Widening the search area with appropriate adjustments preserves a market-based valuation.

Which state uses a 60% total loss threshold, one of the lowest in the U.S.?

Answer: Oklahoma

Oklahoma totals a vehicle when damage reaches 60% of its value.

After paying a total loss, the insurer typically takes ownership of the vehicle and sells it through what channel?

Answer: A salvage auction

Insurers recover salvage proceeds by selling totaled vehicles through salvage auctions.

An appraiser estimating diminished value on a luxury vehicle with low miles and a repaired unibody would expect:

Answer: A relatively high diminished value

Low mileage, high value, and structural repairs all increase diminished value.

Which statement about first-party diminished value claims is most accurate?

Answer: Most policies and states do not cover first-party DV, with Georgia being a notable exception

Most jurisdictions limit DV recovery to third-party claims, while Georgia allows first-party DV under Mabry.

Which is the strongest evidence an appraiser can use to quantify diminished value?

Answer: Dealer trade-in quotes comparing the vehicle with and without the accident history

Market-based dealer quotes directly measure the price impact of the accident history.