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Salvage

(1) Property which escapes destruction or damage, or the residual value of property which is partially damaged. If the insured choses to retain the salvage, the amount of loss payable is the gross loss less the value of take over the salvage the Insurers pay for the full loss and thereafter sell, the salvage and retain the proceeds (gross basis). (2) The remuneration payable independently of contract to an outside party who takes part in a successful rescue operation to save life or property at sea.
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UK: 1. Property saved from a misfortune on land or at sea. 2. An award payable to a third party, known as a salvor, for services rendered to preserve maritime property from an insured peril, provided that the salvor acted voluntarily and the property has been threatened by a maritime peril at sea. Insurers contribute to the award in so far as the peril was insured.
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Property that an insurer has taken over to minimize losses.
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US: Recovery made by an insurance company by the sale of property which has been taken over from the insured as a part of loss settlement.
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This may refer to – (a) property that is rescued from danger on land or at sea; or (b) an award that is paid to someone for voluntarily rescuing property at sea from a marine peril.
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When an insurer makes a payment for lost or damaged property, the insurer is entitled to the salvage of that property.

Salvage agreement

Entered into by parties in a salvage situation. The salvor then acts under contract instead of voluntarily and so forfeits his rights to salvage charges. However, if subscribing to the Lloyd’s Standard Form of Salvage Agreement, the ‘no cure, no pay’ condition is preserved. The successful salvor receives either the sum fixed in the agreement or the amount awarded by a Lloyd’s-appointed arbitrator.

Salvage and Subrogation

Those rights of the insured which, under the terms of the policy, automatically transfer to the insurer upon settlement of a loss. Salvage applies to any proceeds from the repaired, recovered, or scrapped property. Subrogation refers to the proceeds of negotiations or legal actions against negligent third parties and may apply to either property or casualty coverage.

Salvage Association (SA)

SA negotiates salvage contracts when instructed by the shipowner following a loss. It provides expert advice, organises surveys (worldwide) of hull and cargo, including oil industry damage, and supervises salvage operations. British Maritime Technology Ltd acquired SA in 2001.

Salvage charges

The insurance term for salvage award. Compare with SUE AND LABOUR CHARGES; SISTERSHIP CLAUSE.
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An amount paid by the original assured to a party who has rendered services in saving the insured property from a maritime peril on a no cure no pay basis.

Salvage Charges Loss

Salvage charges incurred in preventing a loss by perils insured against may be recovered as a loss by these perils. Salvage Charges means the charges recoverable under maritime law by a salvor independently of contract. They do no include expense of services in the nature of salvage rendered by the assured or his agents or any person employed for hire by them, for purpose of averting a peril insured against. Such expenses, where properly incurred, may be recovered as particular charges or as a general average loss, according to the circumstances under which they were incurred. Salvage charges incurred in connection with an insured peril are recoverable under insurance policies.

Salvage Contract for Marine

In Contract salvage, the owner of the property and the salvor enters into a salvage contract prior to the commencement of salvage operations. The amount may be fixed based on “time and effort” or any other mutually acceptable basis. Normally, in contract salvage, “LOF (Lloyd’s Open Form)” is used worldwide whereby the salvage amount is not mentioned but merely states the principle “No Cure, No Pay.”