Claims · Insurance Term
Salvage
Definition
Salvage is damaged property that still has some value after a loss. When an insurer pays for a total loss, it may take ownership of the damaged property and sell it to recover part of what it paid.
In Plain English
After a total loss, the insurer pays you the value of the property under the policy and may take the damaged items — such as a wrecked vehicle, smoke-damaged inventory or repairable equipment. The money it gets from selling them is salvage.
Sometimes you can keep the damaged property, and the insurer reduces the payment by its salvage value. That can make sense for equipment or materials you can repair or reuse.
Salvage is different from subrogation, where the insurer recovers money from whoever caused the loss. Both reduce the insurer's net cost of the claim.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical and simplified: a warehouse fire ruins $200,000 of stored inventory valued at actual cash value. The insurer pays $200,000, takes the smoke-damaged goods, and sells them to a salvage buyer for $15,000. If the owner wanted to keep the goods instead, the payment might be $185,000.
What to Watch For
- Ask whether you can keep damaged property and what deduction would apply.
- Don't throw away damaged property until the adjuster says it's okay.
- For branded or regulated products, ask how the insurer will handle any sale of salvage.
Last updated October 14, 2026 · Primesure editorial team · How We Write