Practice Test Geeks(CAIA) Certified Automotive Insurance Adjuster Practice Test
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Total Loss Valuation 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 Total Loss Valuation flashcards as text

  1. A vehicle is declared a total loss when repair costs exceed what percentage of the actual cash value (ACV) in most US states?

    Answer: 80%

    Most states use a threshold of 75–80% of ACV, with 80% being the most common statutory total-loss threshold.

  2. Which valuation method uses recent sale prices of comparable vehicles in the same geographic market to determine ACV?

    Answer: Comparable sales method

    The comparable sales method establishes ACV by analyzing actual transaction prices of similar vehicles sold locally.

  3. When adjusting a comparable vehicle's value, which factor would INCREASE the subject vehicle's ACV?

    Answer: The comparable has lower mileage than the subject

    If the comparable has lower mileage, it is worth more; therefore the subject's ACV is adjusted downward from the comparable's price — but relative to the comparable, lower mileage on the comp means the subject is worse, reducing ACV.

  4. What is a 'salvage value' in the context of total loss settlement?

    Answer: The amount the insurer receives by selling the wrecked vehicle

    Salvage value is the proceeds the insurer obtains from selling the totaled vehicle to a salvage buyer or auction.

  5. An insured retains their totaled vehicle for parts. How does this typically affect the settlement?

    Answer: The insurer deducts the salvage value from the ACV settlement

    When an insured retains the salvage, the insurer deducts the salvage value from the ACV payment because the insurer no longer receives those proceeds.

  6. Which of the following best defines 'actual cash value' (ACV) under the broad evidence rule?

    Answer: Fair market value considering all relevant evidence of value

    The broad evidence rule allows adjusters to consider all relevant evidence—market data, condition, mileage, local demand—to determine ACV.

  7. A vehicle has $12,000 in repair costs and an ACV of $14,000. The salvage value is $3,000. What is the net cost to the insurer if it declares a total loss?

    Answer: $11,000

    Net cost = ACV minus salvage value = $14,000 − $3,000 = $11,000, which is less than the $12,000 repair cost, making total loss the economical choice.