How should pre-existing damage be handled in an auto loss?

• A. Include it in the current loss to maximize payout.
• B. Document separately and avoid charging it to the current loss unless policy coverage includes it.
• C. Ignore it entirely.
• D. Charge it to the customer's personal liability.

Answer: (B)

Pre-existing damage is damage that existed before the loss event, so the adjustment should separate it from the current claim. In an auto loss, the insurer reimburses for damage caused by the covered event, not for issues that were already present. Document any pre-existing damage clearly and keep it out of the current loss repair cost unless the policy or an endorsement explicitly covers pre-existing damage. This approach avoids inflating the claim and ensures the settlement reflects only what's caused by the reported event. If coverage does apply, include it only under the appropriate terms.