CAIA - Certified Automotive Insurance Adjuster Subrogation and Salvage Questions and Answers

Question 1

What is the primary purpose of the subrogation clause in an auto insurance policy?

Accepted Answer

To allow the insurer to recover claim payments from the at-fault party.

Answer

To mediate disputes between the insured and a repair facility.

Answer

To calculate the final salvage value of a total loss vehicle.

Answer

To require the insured to pay a higher deductible if they are at fault.

Question 2

An insured's vehicle is declared a total loss. It has an Actual Cash Value (ACV) of $22,000 and a determined salvage value of $4,000. The policy has a $500 deductible. If the insured elects to use the 'owner retained salvage' option, what will be the net settlement amount paid by the insurer?

Accepted Answer

$17,500

Answer

$22,000

Answer

$18,000

Answer

$21,500

Question 3

Which of the following is most essential for an insurer to successfully pursue a subrogation claim?

Accepted Answer

Clear and convincing evidence establishing the other party's liability.

Answer

The insured's vehicle must be declared a total loss.

Answer

The insured must have rental reimbursement coverage on their policy.

Answer

The at-fault party must have the same insurance carrier as the insured.

Question 4

After an insurer pays a total loss claim and takes possession of the vehicle, what is the insurer's primary objective with the resulting salvage?

Accepted Answer

To mitigate its financial loss by selling the vehicle at a salvage auction.

Answer

To repair and resell the vehicle on the retail market.

Answer

To hold the vehicle as long-term evidence in case of a lawsuit.

Answer

To donate the vehicle to a recognized charity for a tax credit.

Question 5

An insured driver with a $1,000 collision deductible is not at fault for an accident. Their insurer pays for the vehicle repairs, less the deductible. The insurer then successfully subrogates and recovers the full amount of damages from the at-fault party's insurance. What is the proper handling of the insured's deductible?

Accepted Answer

The insurer reimburses the insured for the full $1,000 deductible.

Answer

The insured must file a separate claim with the at-fault carrier to recover it.

Answer

The insurer retains the deductible amount to cover its administrative costs.

Answer

The deductible amount is split evenly between the insurer and the insured.

Question 6

Which of the following parties has the first legal right to the proceeds from the sale of a vehicle at a salvage auction?

Accepted Answer

The insurer who paid the total loss claim and took legal title to the vehicle.

Answer

The insured who originally owned the vehicle.

Answer

The lienholder who was listed on the vehicle's title.

Answer

The government entity that issues salvage titles.