What is a “salvor”? If you’re going through the insurance claims process for a property loss – especially for your business – this is one important insurance professional you may come to appreciate.
As public adjusters, we highly value our relationships with salvors. They are brought in by the insurance company as a key partner in helping sell equipment and other salvaged items left in the wake of a property catastrophe. The salvor has several important roles: salvaging items, doing inventory on behalf of the insurance company, and verifying the inventory prepared by a public adjuster (PA) or by the insured. Sometimes they do ‘side-by-side’ inventories with the PA and/or insured.
If the insurance company pays the insured the replacement cost of the items, they may take those items for salvage. When dealing with salvaged goods, the insured needs to be made whole first. This means that, in cases where the insured lacks comprehensive coverage, the proceeds from the sale of the salvaged goods first go to them. If they lack comprehensive coverage, the insured needs to be made whole first – thus the proceeds from the sale of the salvaged goods goes to the insured. If there is enough coverage, the insurance company retains the salvage proceeds.
An experienced salvor has both street smarts and common sense. They can usually find a buyer for just about any damaged property. They have a network of buyers and seek the profile that best fits the type of stock involved. Salvors have “regulars” who routinely purchase stock. For those unusual items – other than warehouse/retail stock – the salvor will ideally have a list of people looking to buy in this niche category.
Pricing is an art when it comes to the valuation of damaged property. Most salvors will either negotiate or bid prices for the property items in a claim. On large stock that’s especially desirable, the salvor will reach out to multiple customers and have them submit bids (sealed or negotiated). We saw this recently in a loss involving an eye surgeon who had salvaged lasers and sophisticated machines for sale. These were worth a lot to a subset of medical practitioners, and consequently sold at high prices.
For more straightforward items – maybe the salvage from a burnt-out hardware store, for example – the salvor will skip the bid process and look for a contact who is most likely to buy those types of items. In those cases, the salvor will calculate cost of freight, location of the possible buyer, and other considerations when negotiating with the buyers that will provide the best return. Based on experience, a well-established salvor should generally know what pricing to expect. When negotiating, salvors might remember that “profit is not a 4-letter word” – everyone needs to make some money.
If they’re not actively selling salvage, the salvor will likely be doing inventories of damaged property – often as a ‘joint inventory’ together with a PA. They work side-by-side and check pricing and documentation. In fact, in the past several years, inventory has increasingly become the focus of a salvor’s job. They still sell salvage, but inventory has emerged as a top service that provides value.
What’s the hottest-selling salvage item right now? Interestingly, it’s paper. The large one-ton and two-ton rolls of paper – like what you’d see in the printing room of a newspaper company – have great value in today’s market because it gets used for packing.
At SMW, we want you to understand all the roles you’ll encounter in the insurance claims process. We hope this overview of the salvor proved helpful.
