What is Salvage?
Salvage is the value that remains in a property or vehicle after it has been damaged or deemed a total loss by an insurance company. In the context of property and vehicle insurance, when damage occurs so extensive that the cost to repair exceeds the insured value, the insurance company may declare the property a total loss. At that point, the property is considered salvage, and the insurer may sell it to recover part of its payout.
In auto insurance, for example, if a car is involved in a severe accident, the insurer may determine that the repair costs exceed the car’s worth, deeming it “totaled.” The salvage value is what the insurer can recoup by selling the wrecked vehicle to a salvage yard or for parts. Salvage title vehicles are often sold at a lower price due to their damaged history.
Homeowners insurance also deals with salvage in the event of major damage, such as after a fire or flood, where parts of the home or its contents might be salvaged and sold to recover some value.