What happens to salvage if the insurance company pays Actual Cash Value (ACV)?

When an insurance company pays out the Actual Cash Value (ACV) for a damaged or totaled vehicle, the salvage rights typically transfer to the insurance company. This is because the payment made to the insured reflects the fair market value of the vehicle at the time of loss and includes an allowance for the condition and any potential salvage value. The insurance company, having compensated the insured for the loss, now has the right to the vehicle as salvage.

By obtaining the salvage, the insurance company can recover some of the costs associated with the claim by selling the damaged vehicle, either through auction or other means. This proceeds from the sale can offset the payout made to the insured, thereby minimizing the overall loss incurred by the insurer.

The other options do not reflect the standard practice in such situations; typically, the insured does not retain salvage if they have been paid for ACV, and the salvage is not sold or managed by the auto body shop.