What is a salvage and recovery clause mean with language such as “All salvages, recoveries and payments recovered or received either prior or subsequent to a loss settlement under this policy shall be applied as if recovered or received prior to the said settlement and all necessary adjustments shall be made by the parties hereto, including deduction of the Company’s cost of recovery or salvage.”?
This has to do with car insurance policy for a motor cargo truck found in a Lexington policy.
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The term comes primarily from ocean marine insurance. Often a ship will have a fire in the hold. An adjuster will fly out to the ship while it is underway, evaluate the loss and the insurance company may adjust the claim before the ship even reaches port. That portion of the property that has been declared as loss becomes the property of the insurance company.
There are companies that specialize in salvaged property. This is most commonly seen in the cases of ships but could apply to other forms of recovery.
While I am not sure of the legal interpretation, this clause might extend to the insurance company the right to claim any gain that an insured might have on property that was declared as a total loss, and then sold to a salvage company.