Property claims glossary
What is salvage in property insurance?
Salvage is the carrier's right to take damaged property it has paid for in full and recover its remaining value, usually by selling it. The amounts are small on most homeowners claims, but they add up across a book and are easy to overlook.
Worked example · fictitious claim
A carrier pays $12,000 to replace water-damaged appliances and furniture. A salvage buyer pays $1,500 for the damaged items, less $300 in handling costs, for a net recovery of $1,500 − $300 = $1,200. The claim's net cost falls to $12,000 − $1,200 = $10,800.
How it affects a settlement
Salvage does not reduce what the family is paid; it reduces the carrier's net cost after payment. Sometimes the family keeps a damaged item instead, and the payment is reduced by its salvage value.
In practice
The carrier's right to take ownership of damaged property it has paid for (a totaled roof's materials, damaged contents) and recover residual value. Small per claim, meaningful at portfolio scale, routinely forgotten.
Related
Subrogation · Claims leakage · Claims leakage · property claims glossary