How does an insurer typically handle salvage after a settlement?

When an insurer handles salvage after a settlement, it typically deducts the salvage value from the settlement amount. This approach is based on the principle that the insurer is responsible for paying the value of the loss up to the amount of the settlement. If the insured vehicle has a salvage value, the insurer can recover some of its loss by selling the salvaged vehicle. By deducting this salvage value, the insurer ensures that the payment made to the policyholder reflects only the actual value of the loss without the potential recovery from the salvage.

This process allows the insurer to be fair and equitable in the settlement, considering that the policyholder receives a total payment that accounts for the still achievable value from the damaged vehicle. It ensures that the insured isn't compensated for both the full value of the vehicle and also retaining any potential salvage value, which would lead to an unfair gain.