What is salvage in the claims process?

• A. Additional premium charged for salvage recovery.
• B. Recovered value from damaged property; proceeds are recovered or offset against the loss, with proper accounting.
• C. The amount paid to the insured as a replacement.
• D. Salvage refers to the cost to pursue litigation.

Answer: (B)

Salvage is the recovered value from damaged property that can be realized after a claim is paid. When a loss occurs, the insurer may take possession of the damaged item or authorize its sale for salvage. The money from selling the salvageable parts or items is then applied to or offset against the claim payment, reducing the insurer’s net loss and ensuring proper accounting of the recovery. This concept is distinct from charging extra premiums, paying the insured a separate replacement amount, or the costs of pursuing litigation.