Salvage Rights to House?

The scenario is this. We have a client who was under-insured at the time of loss. The policy limit on the contents portion of the claim was $28,800. The ACV of the contents was $43,000. The insurance company claimed salvage rights and selected which items from the contents list to cover in order to reach the policy limit.

My question is two fold. First, does the insurance company have salvage rights even though the claim is underpaid ($28,800) and the client is not made whole until the ACV of the contents ($43,000) is recovered? Second, if in fact the insurance company is entitled to salvage rights under these conditions, do they have the right to pick and choose which items from the contents they will cover?

Pennsylvania Subscriber

The company does not get to pick and choose the items it pays for. The insured gets to decide which items they get paid for; maybe they really want the TV replaced instead of the microwave, that's the insured's option. Under recovered property, the option of retaining recovered property is at the discretion of the insured, not the company. The insured gets to determine which property they get paid for, and if they want to keep the salvage for that property they have that option as well. If the insured retains the salvage, the payment is adjusted for the salvage value. If the insured does not want the salvage then the company can have it, but not before. The company does not own the property or have first claim to it by virtue of insuring it.

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