Salvage in Car Insurance

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Salvage in Car Insurance

Since India is a highly populated nation, we see a large number of vehicles on the road being used by citizens to travel. However, not all drivers adhere to the traffic and safety rules, leading to accidents and fatalities.

In many cases, the accidents are so severe that they gravely injure the people involved and also damage the vehicle beyond repair. Having motor vehicle insurance offers protection in case you meet with a collision. If you are a vehicle owner in India, you must know about salvage meaning in insurance.

Salvage is a crucial concept in four-wheeler insurance for both the insurance company and the insured. In this blog we shall explore the role of salvage in insurance, the factors that affect the salvage value, and more in this article!

What is Salvage in Insurance?

Salvage refers to the value of a damaged asset. In the case of car insurance, it is the value of the car that can be obtained by selling it to the salvage yard or a third-party. Salvage value comes into the picture when your car has been damaged extensively and is beyond the scope of repair.

When your car is significantly damaged to the extent that its repair cost is more than its actual value, the insurance companies declare it a total loss. In such situations, the insurance provider takes possession of the damaged car and may sell it as a scrap.

For instance, if a vehicle is beyond repair and must be sold to a salvage yard that offers ₹1,00,000, then this is the car's salvage value.

The concept of salvage charges in car insurance is crucial for insurance companies as it affects the amount of claims they must pay to the insured.

Factors that affect a car's salvage value are mentioned below.

What Affects Salvage Amount in Insurance?

The Damage- If the car has met with a very serious accident and is damaged to a great extent the salvage value will be less. On the other hand, if the damage is moderate, one may get a slightly higher salvage value.

Age and Condition of the Vehicle- If a car is relatively new and in good condition, the salvage value will be higher. And if the car is old and completely damaged, the value may be very minimal.

Demand and Supply—The market's demand and supply conditions also determine the salvage value. If the parts of your vehicle are in high demand in the market, it can fetch you a good salvage value.

Repair Costs- A higher repair cost means your vehicle will fetch a lower salvage value and vice versa.

Understanding Salvage Deduction in Car Insurance

As a vehicle owner, you may want the highest protection for your vehicle and a high insurance claim in case of any mishap. You may also pay high premiums to buy comprehensive car insurance in lieu of getting a high claim amount.

However, things are different, especially when salvage is involved. Technically speaking, the salvage is the insurer’s property after they settle the claim. But when it comes to disposing of the salvage car, insurance providers may charge a specific percentage of the claim amount to deal with the policyholder’s car, known as salvage deduction.

A salvage deduction by the insurance provider leads to a lesser claim amount for the policyholder.


Being aware of salvage in car insurance is essential, as it helps you smoothly navigate the car insurance claim if your car is damaged beyond repair. Salvage is the final value of a car that is offered after it is declared a complete loss or when the repair charges are more than the present value of the car.

As mentioned above, many factors contribute to determining the salvage value. Regardless of the salvage value, you can get a high claim amount by purchasing insurance from a reputed insurance provider that offers add-ons and other beneficial features.

The Need for Car Insurance Policy

Car insurance is a mandatory requirement under the Motor Vehicles Act and benefits vehicle owners in several ways. First, it protects them against third-party liabilities. Second, it provides financial assistance for own damage, personal accident cover, etc. One must always purchase car insurance from a trustworthy provider to get the maximum benefits.

Tata AIG is a renowned name in the country when it comes to insurance, offering plenty of benefits at affordable premiums. Our insurance plans allow you to minimise the salvage deduction amount by adding a return-to-invoice cover to your comprehensive insurance policy.

You can also benefit from online purchase and car insurance renewal options, a no-claim bonus, and many other customisable add-ons. Visit our website today to learn more about car insurance!

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

Related Articles

What is a total loss?

What is a total loss?


A total loss occurs when the cost of repairing the vehicle is more than its value. There can be two scenarios under which total loss can occur: a car theft or damage to a vehicle beyond repair.

What is the claim amount in case of a total loss vehicle?


The claim amount is calculated by reducing the deductible from the car's IDV, which the insurer pays to the insured.