Hawaii Insurance License Practice Exam

When an insurance company makes payment for loss of damaged property, the salvage belongs to:

1. The insured

2. The insurer

3. The state

4. The appraiser

The correct answer is: The insurer

When an insurance company pays for the loss of damaged property, ownership of the salvage typically reverts to the insurer. This is because the insurance company has compensated the policyholder for the total loss or damages, and they effectively take on the rights to any remaining value of the damaged property, known as salvage. By receiving compensation for the loss, the insured has transferred their interest in the damaged property to the insurer. As a result, if any parts of the property can be salvaged or sold, those proceeds belong to the insurer, as they have absorbed the financial loss and thus have rights to any residuals that may still hold value. This practice is common in many insurance policies and helps insurers mitigate their overall losses by recouping funds through salvage efforts.