What is Salvage in the context of insurance?

Salvage in the context of insurance refers to property taken to minimize the insurer's loss. This means that after a loss occurs, if there are items or property that can be salvaged—meaning they can be repaired, reused, or sold—the insurer often has the right to take possession of these items. By doing so, the insurer reduces its financial exposure as it can recover some of the costs associated with the claim.

In the insurance process, salvaging helps both the insurance company and the insured. The insurer can recoup some of its losses, which can ultimately lead to lower premiums for policyholders when losses are managed efficiently. Salvaging is often a key component in claims handling and loss mitigation strategies.

The other options do not accurately capture the meaning of salvage in this context. Temporary storage of damaged property focuses on logistics rather than the recovery aspect. Funds set aside for future losses relate to reserves rather than salvage. Legal fees associated with documenting a claim pertain to the administrative costs of filing a claim, not the recovery of lost assets.