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Marine salvage

The activity of rescuing a ship and its cargo in peril, financed by insurance because it reduces the loss the insurer would otherwise pay.

Definition

Marine salvage is insurance's arm in the physical world: the operator who brings back from the seabed whatever will come off an indemnity. Its remuneration, assessed on the salved value, is borne by the hull and cargo insurers, who always prefer to pay a percentage of the salved value rather than a hundred percent of a total loss. There is nothing picturesque about the salvor: it is a loss-mitigation line item, and its work points to an often underestimated function of insurance: active loss mitigation. Security, in the form of guarantees posted by the salved interests' insurers, makes the job economically viable.

Its 7 cross-references, woven across the glossary's 18 categories
Marine salvage: Insurance glossary illustration, AlgoPolis
Example

After the wreck of the Lutine in 1799, the London underwriters sent their own agents to the wreck site, quicker off the mark than the navy, to recover whatever would reduce their loss.

Read next
InsuranceNo cure, no payThe marine salvage principle under which the salvor is paid only if it saves something, and in proportion to the value saved.Read the entry →InsuranceIndemnity principleA fundamental principle: the insurance indemnity cannot exceed the loss actually suffered. It restores policyholders to their prior position without enriching them.Read the entry →TransportSue and labor clauseA clause that reimburses, in addition to the sum insured, the expenses the assured itself incurs to avert or reduce an insured loss.Read the entry →
Related terms
Also known as

salvage, marine salvage, salvage award, marine salvage insurance, vessel salvage

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