What does the right of salvage allow an insurer to do?

The right of salvage enables an insurer to recover partially damaged property after a claim has been settled for a loss caused by an insured peril. When an insured property is damaged, the insurer may pay for the loss based on the value of the property at the time of loss. However, if there is any residual value or if the damaged property can be repaired or salvaged, the insurer has the right to take possession of that property. This process helps the insurer mitigate losses by recouping some of the paid-out claim amount through the recovery of the salvageable portions of the property.

Understanding this right is crucial for both insurers and insureds, as it clarifies the responsibilities regarding damaged property. Insurers often use this right to ensure they are not unduly penalized for claims, and it reinforces the concept that they can recover some of the losses, thereby keeping the insurance system balanced and sustainable.