What does salvage value mean?
If the vehicle is a total loss and a FMV is agreed upon, the liability carrier will require the Title and possession of the vehicle in exchange for the settlement check. In other words, the insurance company will not pay the FMV and allow you to keep the vehicle. This is because there is usually some residual or leftover value in a totally damaged vehicle. At the very least, the vehicle can be stripped and some of the parts sold. The value of what is left of the “total loss” vehicle is referred to as the “salvage value.” When the adjuster pays the FMV then you must sign over the Title to the vehicle. If you wish to keep the vehicle then the insurance company will pay you the FMV minus the “salvage value.”
Usually the “salvage value” is between 10-25% of the total loss value. In other words, if you wish to keep the vehicle then you have a right to do so, but the insurance company will offer less money to allow you to keep the vehicle in its salvaged condition. When we handle property damage claims, if the client requests, we will ask the adjuster to give us two offers: one if the insurance company takes the vehicle and one if our client keeps it, so that our client can make an informed decision.