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What is Meant by Salvage in Car Insurance?

This comprehensive guide provides clarity on the role of salvage in car insurance and its significance in handling accidents and total losses.

  • 12 Jan 2024
  • 3 min read

Road conditions in India, and people's ignorance of traffic rules place our country among those highly vulnerable places where the highest number of accidents occur. Sometimes, these accidents are so dreadful and horrific that even the boldest individual would think twice before venturing to witness the mayhem with their own eyes.
In such scenarios, have you ever wondered about the role of insurance companies? Is there any specific car insurance for salvage cars? How does the insurer pay for the total loss? Before you start doing your maths, let's learn about the critical concept of salvage in car insurance.

Salvage in Car Insurance

Salvage refers to a damaged vehicle acquired by an insurance company after compensating the policyholder for a covered loss. When your car meets with an accident or gets damaged significantly, and the repair cost outweighs the car's value, the insurer declares it a total loss. At this point, they take possession of the damaged vehicle and may sell it as scrap to recoup some of the claim payout.
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 overall demand for specific car parts in the market affects salvage value. The salvage value may increase if there is a high demand for parts from your car model.


Availability of Parts:

The salvage value might be lower if similar 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.

Also read:


Salvage is an important concept. Suppose you are familiar with this term and the charges associated with the salvage procedure. In that case, it will be easier to navigate the claim process if your car becomes irreparably damaged and you have a return to invoice cover add-on in your insurance.

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