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Salvage Rights Exam 2026–2027 |
Comprehensive Question Practice Test with
Answers & Rationales| Free Pdf Access
1. In property and auto insurance, “salvage” refers to:
a) The process of cleaning a damaged building
b) Damaged property that the insurer takes ownership of after
paying a total loss claim
c) The insured’s right to cancel the policy
d) The agent’s commission on a claim
Answer: b) Damaged property that the insurer takes ownership
of after paying a total loss claim
Rationale: Salvage is the damaged property (remnants) that
remains after a total loss, to which the insurer becomes entitled
upon paying the full claim.
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2. True or False: The right of salvage automatically transfers to
the insurer upon payment of any partial loss claim.
Answer: False
Rationale: Insurer’s salvage rights generally arise only when the
insurer pays a total loss claim. For partial losses, salvage rights
typically remain with the insured unless the policy states
otherwise or the insurer pays the full repair cost and takes the
damaged part.
3. The legal principle that allows an insurer to take ownership of
salvage is:
a) Indemnity
b) Subrogation
c) Abandonment via constructive total loss
d) Contribution
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Answer: c) Abandonment via constructive total loss
Rationale: When the insured abandons damaged property to
the insurer after a total loss, the insurer acquires salvage rights.
Subrogation involves recovering from third parties, not physical
salvage.
4. After an auto total loss settlement, the salvage title is typically
transferred to:
a) The insured
b) The insurer or its designated salvage vendor
c) The state DMV only
d) The repair shop
Answer: b) The insurer or its designated salvage vendor
Rationale: Upon paying a total loss, the insurer (or its agent,
e.g., Copart, IAA) receives the salvage certificate/title and sells
the vehicle as salvage.
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5. A “salvage retention” option allows the insured to:
a) Keep the damaged vehicle and deduct its salvage value from
the total loss settlement
b) Force the insurer to repair the vehicle
c) Double the claim payment
d) Avoid a total loss designation
Answer: a) Keep the damaged vehicle and deduct its salvage
value from the total loss settlement
Rationale: The insured may choose to retain salvage; the insurer
pays actual cash value (ACV) minus salvage value.
6. In auto physical damage, the “total loss threshold” varies by
state, but a common trigger when salvage rights arise is:
a) Damage exceeds 50% of ACV
b) Damage exceeds 75-100% of ACV or cost of repair exceeds
Salvage Rights Exam 2026–2027 |
Comprehensive Question Practice Test with
Answers & Rationales| Free Pdf Access
1. In property and auto insurance, “salvage” refers to:
a) The process of cleaning a damaged building
b) Damaged property that the insurer takes ownership of after
paying a total loss claim
c) The insured’s right to cancel the policy
d) The agent’s commission on a claim
Answer: b) Damaged property that the insurer takes ownership
of after paying a total loss claim
Rationale: Salvage is the damaged property (remnants) that
remains after a total loss, to which the insurer becomes entitled
upon paying the full claim.
,Page 2 of 44
2. True or False: The right of salvage automatically transfers to
the insurer upon payment of any partial loss claim.
Answer: False
Rationale: Insurer’s salvage rights generally arise only when the
insurer pays a total loss claim. For partial losses, salvage rights
typically remain with the insured unless the policy states
otherwise or the insurer pays the full repair cost and takes the
damaged part.
3. The legal principle that allows an insurer to take ownership of
salvage is:
a) Indemnity
b) Subrogation
c) Abandonment via constructive total loss
d) Contribution
,Page 3 of 44
Answer: c) Abandonment via constructive total loss
Rationale: When the insured abandons damaged property to
the insurer after a total loss, the insurer acquires salvage rights.
Subrogation involves recovering from third parties, not physical
salvage.
4. After an auto total loss settlement, the salvage title is typically
transferred to:
a) The insured
b) The insurer or its designated salvage vendor
c) The state DMV only
d) The repair shop
Answer: b) The insurer or its designated salvage vendor
Rationale: Upon paying a total loss, the insurer (or its agent,
e.g., Copart, IAA) receives the salvage certificate/title and sells
the vehicle as salvage.
, Page 4 of 44
5. A “salvage retention” option allows the insured to:
a) Keep the damaged vehicle and deduct its salvage value from
the total loss settlement
b) Force the insurer to repair the vehicle
c) Double the claim payment
d) Avoid a total loss designation
Answer: a) Keep the damaged vehicle and deduct its salvage
value from the total loss settlement
Rationale: The insured may choose to retain salvage; the insurer
pays actual cash value (ACV) minus salvage value.
6. In auto physical damage, the “total loss threshold” varies by
state, but a common trigger when salvage rights arise is:
a) Damage exceeds 50% of ACV
b) Damage exceeds 75-100% of ACV or cost of repair exceeds
