Subrogation and Salvage Flashcards
7 cards from real CAIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Subrogation and Salvage flashcards as text
Which legal doctrine holds that a subrogated insurer 'stands in the shoes' of the insured when pursuing recovery from a third party?
Answer: Equitable subrogation
Under equitable subrogation, the insurer assumes the same legal rights and position as the insured to recover from the responsible party.
An insurer discovers that the salvage vehicle it sold at auction was actually repaired and resold without disclosure of its salvage title status. This is an example of:
Answer: Salvage title washing
Salvage title washing occurs when a salvage-titled vehicle is re-registered in a state with less stringent disclosure laws to obscure its salvage history.
In a multi-vehicle accident where both drivers share fault, how does comparative negligence affect the insurer's subrogation recovery?
Answer: Recovery is reduced proportionally to the insured's percentage of fault
In comparative negligence states, the insurer's subrogation recovery is reduced by the percentage of fault attributed to the insured.
What is the role of a 'salvage pool' or 'salvage auction' in the total loss process?
Answer: To provide a marketplace where damaged vehicles are sold to dismantlers, rebuilders, and dealers
Salvage pools/auctions are platforms where insurers sell totaled vehicles to buyers such as auto dismantlers, rebuilders, and used parts dealers.
When an insurer pays a first-party comprehensive claim for a stolen vehicle that is later recovered, what typically happens next?
Answer: The insurer evaluates repair costs and determines whether to retain or return the vehicle to the insured
Upon recovery, the insurer evaluates repair cost versus salvage value; if repairs are feasible, the insurer may offer to return the vehicle with the insured reimbursing the claim payment.
Which federal regulation requires insurers to report total loss vehicles to avoid fraudulent re-titling and protect consumers?
Answer: The National Motor Vehicle Title Information System (NMVTIS)
NMVTIS requires insurers and junk/salvage yards to report total loss and salvage vehicles to a national database accessible to consumers and title agencies.
A subrogation demand letter sent to the at-fault party's insurer should include which key elements?
Answer: Claim details, amount paid, proof of the at-fault party's liability, and a demand for reimbursement
A subrogation demand letter must document the loss, establish liability, state the amount paid, and formally demand reimbursement from the responsible party's insurer.