In the context of insurance, what is salvage?

Salvage refers specifically to the right of the insurer to recover and sell damaged property after a loss has occurred. This process allows the insurer to offset some of their losses by recouping part of the cost through the sale of the salvaged items.

When a claim is made and the property is deemed a total loss or partially damaged, the insurer may take possession of the damaged property. The insurer can then attempt to sell it for any remaining value, which helps to reduce their financial exposure from the claim. This practice is common in various types of insurance, including property and automobile insurance.

The other options do not accurately define salvage in the insurance context. Recovering lost items typically refers to personal property or belongings but does not encompass the broader concept of the insurer's rights. Funds paid out after a full loss describe payouts but do not relate specifically to the process of salvage. Lastly, the portion of the policyholder's premium used for claims is related to pricing and risk assessments rather than the tactical recovery of value through salvage.