Florida 2-20 General Lines Agent (Property, Casualty, Commercial Lines and Florida Law)General InsuranceEasy
A Florida General Lines Agent explains to a new client that the insurance company has the right to take possession of damaged property after paying for the full loss. Which insurance concept is the agent describing?
- ASubrogation
- BSalvage
- CAppraisal
- DContribution
Show answer & explanationAnswer & explanation
Correct answer: B. Salvage
Salvage refers to the insurance company's right to take possession of damaged property after paying a total loss, then sell it to recover some of the loss. This reduces the overall cost of the claim for the insurer.
Why the other options are wrong
- A. Subrogation is the insurer's right to pursue a third party responsible for a loss.
- C. Appraisal is a method to resolve disputes over the value of damaged property.
- D. Contribution involves multiple insurers sharing a loss.
Salvage
The right of the insurer to take possession of damaged property after paying for its full value, and then sell it to recover a portion of the loss.
- Applies typically to total losses.
- Reduces the net cost of the claim for the insurer.
- Property owner must relinquish ownership to the insurer.
Memory trick: Don't just pay, sometimes you can Salvage the day!