Updated on 30 Nov 2025
Be it renewing your four-wheeler insurance or diving into the fine print of a new policy, you might have come across terms like IDV, deductibles and salvage. While some of these might sound like technical jargon, they have a real impact on how much you receive if your car ever faces significant damage.
In this blog, we unpack everything you need to know about salvage in car insurance- what it is, how it is calculated and why understanding it is crucial for every car owner.
Salvage in car insurance
In car insurance, salvage refers to a vehicle that has been declared a total loss by the insurance company due to severe damage beyond repair. The car may be considered a total loss if its repair costs exceed 75% (or a set threshold as per the insurer) of the IDV. Once declared a total loss, the car may be issued a salvage title or certificate.
Salvage does not usually apply to third-party car insurance, as that policy covers only liability towards others involved in an accident with your vehicle and not your car. To be protected in such situations, comprehensive four-wheeler insurance is recommended.
What affects the salvage amount in insurance?
Salvage value is the assessed value of a car after it has been declared a total loss due to heavy damage. In such cases, the insurance company typically compensates the policyholder with the vehicle’s Insured Declared Value (IDV). Some parameters affecting salvage charges in car insurance are:
- Extent of damage:Extensive damage tends to lower the salvage value, while moderate damage may result in a higher value.
- Make and model:Popular models with high demand for their parts often have a higher salvage value than less sought-after vehicles.
- Market conditions:The salvage value may increase if there is a high demand for the parts of your car model.
- Availability of parts:The salvage value might be lower if the car parts are readily available. Rarity and scarcity of specific components can drive up the salvage value.
- Repair costs:Higher repair costs often lead to a lower salvage value.
Understanding salvage deduction in car insurance
When your vehicle is damaged beyond economical repair, the insurer may declare it a "total loss." In such a case, you can choose to retain the vehicle or let the insurer take possession of it, and they will dispose of it at a scrapyard.
Salvage deduction is the amount subtracted from the claim amount if the damaged vehicle is retained by the policyholder instead of being handed over to the insurance company.
Let us say your car’s IDV is ₹5,00,000 and the salvage value is ₹50,000. If your car is completely wrecked and you want to keep it, your insurance payout would be ₹4,50,000.
Conclusion
In a world where unforeseen events can turn the ordinary into the unexpected, understanding your car insurance and the associated terms like ‘salvage’ better is one of the most responsible steps you can take as a car owner. If you are familiar with what salvage is and the charges associated with the salvage procedure, it will be easier to navigate the claim process if your car becomes irreparably damaged.
Unsure how salvage value might affect your claim or policy decisions? Let us help. Fill out the form on this page to receive personalised four-wheeler insurance advice from our experts, so you can make confident, well-informed choices- whether you're dealing with total loss, salvage deductions or selecting the right plan.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.