In the context of insurance, what is a salvage?

Salvage refers to the remnants of a damaged item that can potentially be recovered or sold after an insured loss occurs. This concept is essential in insurance because, when a claim is paid out for a total loss, the insurer may have the right to the salvageable parts of the item to recoup some of their costs. For example, if a vehicle is declared a total loss after an accident, the insurer may sell the salvageable parts of that vehicle. This is significant in claims handling, as it can affect the total payout amount to the insured. Understanding salvage helps both adjusters and policyholders navigate the financial implications of insurance claims effectively.