YOU ASK:

What is aircraft insurance salvage?

WE ANSWER:

The term "salvage" refers to the part of an aircraft owned by the insurance provider, which remains after a jet has been totaled. Aircraft salvage is what is left after physical damage compensation has been paid to the owner of the plane.

The Importance of Aircraft Salvage

Aircraft salvage becomes important when an insured jet has suffered serious physical damage and needs to be totaled. The aircraft insurance provider usually decides on whether it would be economically feasible to repair the damaged plane.

A decision to total a damaged plane is usually made in the following situations:

  • If the sum needed to repair the jet is equal to the insured value of the jet.
  • If the repair costs are so high that - when added to the salvage value - they equal the sum for which the plane has been insured.
  • If the cost of repair work exceeds 70 percent of the jet's insured value.

In the situations described above repair of an insured plane, which has suffered physical damage, is considered economically unfeasible for both the insured and the insurer. When the damaged jet is totaled, the owner of the plane receives compensation up to the policy limits, and the salvage - that is the damaged jet - becomes the property of the insurance provider who can then sell it in an aircraft salvage auction.

How Aircraft Insurance Salvage Bids Work

Lists of aircraft salvage on offer are usually posted on the United States Aircraft Insurance Group (USAIG) website, accompanied by detailed explanation about the damages, details about the salvage and illustrations of the current conditions of the plane. Prospective buyers need to select the bid they are interested in, print out the electronic form, fill it in and mail it to the address specified at the bottom of the page.

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