What does salvage refer to in insurance?

Salvage in insurance refers to the steps taken to reduce the amount of a loss. When a loss occurs, particularly in property and casualty insurance, the insurer may take action to recover or preserve property to minimize the payout required for the claim. This can involve actions such as repairing damaged property or selling salvaged items to offset losses. The concept of salvage aims to increase the overall effectiveness of loss management and reduce financial exposure for both the insured and the insurer. In this context, pursuing salvage is a proactive measure that shows diligence in managing claims and losses.

The other options focus on different aspects of the insurance process. Recovering components from a claim is more about what happens after a loss is reported rather than preventative measures. Recouping losses from the insured typically involves ongoing recovery efforts post-claim settlement, while the valuation of damaged property is about assessing worth, not about reducing the loss itself.