Property Insurance FundamentalsQuestion 157 of 158
After paying a total loss on an insured automobile, the insurer takes title to the wrecked vehicle and sells it to a salvage yard for $1,500. This is an exercise of the insurer's right of:
a.Subrogation against the insured
b.Coinsurance recovery
c.Salvage
d.Pro rata contribution
Explanation
Salvage is the insurer's right, after paying for a total loss, to take possession of the damaged property and recover whatever value remains. It complements the principle of indemnity: the insured collects the loss but does not also keep the wrecked car and resell it for additional gain.
Law Reference: Standard policy condition; Cal. Ins. Code §2071Practice all 158 questions free — no signup required.
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