Salvage: How does salvage affect a car insurance claim?

Salvage How does salvage affect a car insurance claim

Salvage is the material value of the damaged vehicle or parts of the vehicle. When you file a claim of a badly damaged car. The insurance company settles the claim as a total loss if the vehicle is not repairable or uneconomically repairable.

Surveyor suggests a salvage amount and the company deducts this amount from the total claim amount. If the repair cost exceeds 75% of IDV, called uneconomically repairable.

Salvage Right: Why insurance companies deduct salvage?

Once the insurance company pays the claim for the damaged vehicle, it issues a salvage title to the vehicle. It is to warn future buyers that this vehicle declared a total loss. According to the terms of car insurance, insurance companies have right over the vehicle after paying the total loss claim.

Your insurance companies deduct this amount from the total claim amount when you take possession of the damaged vehicle/parts. Insurer deducts the amount approved by the surveyor. Insurance companies reduce their losses through the deduction of this amount.

In another case the company takes the possession and doesn’t do any deduction from the claim amount. The company sells these salvage items to buyers.

Salvage with RC

In this case, wrecked items/vehicle remains with the insured. Your insurance company does not take over it. The company deducts the salvage amount from the total claim. The company does other standard deduction as per policy wording. You can understand with the given example:

Salvage DeductionRs.40000
Other Standard DeductionRs.5000
Total Claim paidRs.455000
Example is only for understanding, actual figure may be different.

Salvage without RC

Here your insurance company takes possession of the damaged parts/vehicles. Salvage amount not deducted from the total claim amount. Other deduction as per policy wording.

Other Standard DeductionRs.5000
Total claim paidRs.495000
Example is only for understanding, actual figure may be different

Later, insurance companies sell it to the buyers through online or offline auction.

What salvage buying companies do with it?

Insurance companies sell out the vehicles through online auction or offline. Buyers companies mainly opt for these options after buying it- (1) Dismantle the vehicle and sell its parts. These parts referred to as salvage parts. or (2) Repair this kind of vehicle at a low cost and sell it or use it.

Parts are generally available to repair other vehicles. Let’s understand with this table

Car ACar B
Car A is damaged in an accident and the insurance company has settled it as a total loss claim. Wrecked car has been sold to a vendor in an online auction.Car B is damaged in an accident and repaired. Parts are available from another car A through a vendor. These parts were taken from the car A through the vendor.

What are the benefits of buying a salvage vehicle?

Buyers can repair the vehicle at lower cost and use it.

Mechanic and automobile workshop can use these vehicles for training and practical purpose.

Automobile professional can use it for related projects.

Repair another vehicles by using the parts.

You can buy it to learn driving.

There may be many benefits to these vehicles and their parts. But can understand that the vehicle was totally damaged at some point in time. So, some risks may be with it. The vehicle is not normal as it was before the total loss. You should always analyze the risk and should take expert opinion for using a salvage titled vehicle.