Salvage: What is it and How Does it Affect Car Insurance Claim?

salvage in car insurance
salvage in car insurance policy

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

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

If you want to know more about salvage, this article is going to be very helpful for you. Because I will explain it with examples so that you can understand it well. So let’s go into the details.

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Salvage Right: Why do 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 was declared a total loss. According to car insurance terms, insurance companies have the right over the vehicle after paying the total loss claim.

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

why deduct salvage
why deduct salvage

In another case, the company takes 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 deductions as per policy wording. You can understand with the given example:

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

I have not included other factors while giving the above example so that you can get my point easily. And I hope you got my point and know what Salvage is with RC.

Salvage without RC

Here your insurance company takes possession of the damaged parts/vehicles. The salvage amount is not deducted from the total claim amount. Other deductions are as per policy wording.

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

Later, insurance companies sell it to the buyers through an online or offline auction. Now I hope you understand what is Salvage without RC.

If you have a car insurance policy or want to buy a car insurance policy, understanding both is important. Because this is an important point in a car insurance policy. Now let’s understand other things related to salvage. And also understand the difference between salvage with RC and salvage without RC.

What salvage buying companies do with it?

Insurance companies sell out the vehicles through online auctions or offline. Buyer companies mainly opt for these options after buying it- (1) Dismantle the vehicle and sell its parts. These parts are referred to as salvage parts. or (2) Repair this kind of vehicle at a low cost and sell it or use it for some allowed purposes from regulatory authorities.

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

Car ACar B
Car A is damaged in an accident and the insurance company has settled it as a total loss claim. The 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 car A through the vendor.

I have given the above example to make the topic easy. And hope you understand the above.

What are the benefits of buying a salvage vehicle?

Buyers can repair the vehicle at a lower cost and use it. Mechanics and automobile workshops can use these vehicles for training and practical purpose. Automobile professionals can use it for related projects.

Repair another vehicle by using the parts. You can buy it to learn to drive. 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.

salvage and insurance
salvage and insurance policy

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. And if you are taking it, you must understand the rules and regulations about it. Because it may have some regulations and is allowed for some limited purposes/work only.


If you have vehicle insurance, you should go through the terms and conditions of your policy. Salvage is one of the important topics and you should understand it. And if have any doubt about any terms, you should contact your insurance company and agent to understand them well. So that you get a complete understanding of your policy and don’t get any problems at the time of claim.

There are several general insurance companies like Iffco Tokio, New India, etc. As of today, you have so many options to purchase car insurance. And even you can purchase an insurance policy for your vehicle online and offline both. I hope the above topic was well explained and it was helpful for you.

There are so many other topics related to insurance available on this site and you can read them to know more. Whether you want to gain knowledge about health insurance, car insurance, or bike insurance, you can read other articles on this site. And if you like articles then please don’t forget to share them with your friends. Thanks for reading the article.

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