Glossary

Salvage value

What a damaged or totaled car is worth as a wreck, usually the amount an insurer expects to get for it at a salvage auction.

Also called: salvage amount, wreck value

Salvage value is the amount a wrecked vehicle is worth in its damaged state, to rebuilders, parts recyclers or scrap buyers. Insurers estimate it from salvage auction results for similar vehicles with similar damage.

It matters in two ways. First, it can decide whether a car is totaled. Many states use a percentage total loss threshold, but some use a total loss formula: the car is a total loss when the repair cost plus salvage value equals or exceeds its actual cash value. Example: a car worth $15,000 needs $11,500 in repairs and has a salvage value of $4,000. Repairs plus salvage come to $15,500, so under a total loss formula the insurer totals it (hypothetical figures).

Second, it sets the deduction if you keep the car. With owner-retained salvage, the insurer subtracts the salvage value from your settlement; in the example above, you would receive $15,000 minus $4,000, minus your deductible, and keep the damaged car. If you hand the car over instead, the insurer sells it to recover part of what it paid you, which is why it takes the title. If you are keeping the car and the insurer's salvage figure seems high, ask how it was calculated, since a lower figure means a larger payment to you. See what happens when your car is totaled.

Last reviewed October 4, 2026

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Related terms

Total loss A car so badly damaged that repairs would cost more than it is worth, or more than a state threshold, so the insurer pays its value instead. Owner-retained salvage Keeping your car after the insurer declares it totaled; the payout drops by the car's salvage value and the title is usually branded. Total loss threshold The point, set by state law or insurer practice, at which a damaged car is declared totaled rather than repaired, often a percentage of its value. Actual cash value What a car was worth just before a loss — replacement cost minus depreciation — and the basis of most total-loss payouts. Salvage title A branded vehicle title issued after a car is declared a total loss, warning future buyers of serious damage; it must be rebuilt to drive legally.

Related guides

What happens when your car is totaled How insurers decide a car is a total loss, how state thresholds differ, what the settlement includes, and the paperwork from offer to payment. Why car repairs cost so much more than they used to The sensors, materials, bigger vehicles, labor, parts and tariff pressures behind higher repair bills, how they reach premiums, and what you can do.

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Total loss payout estimator Estimate a total-loss settlement, what goes to your lender, and whether you would still owe money on a totaled car.