10 items you didn’t know could be sold for salvage

When most of us think of salvage, vehicles are probably the first things that come to mind. But in reality, large salvage items can include everything from fire damaged heavy equipment, to structures, to items damaged in a hurricane.

The total salvage market is estimated to be valued around $1 billion, but only 5-10% of that inventory is currently being sold. Many insurers view salvage as an afterthought and recovery proceeds are often addressed just before the adjuster closes the file. 

But there's more opportunity there than just that. Click through the following pages to learn more about the salvage market.

The traditional approach 

Salvage items are typically not tracked, are often incorrectly categorized and sales efforts are rarely coordinated to ensure a maximum return on investment. Ideally, the salvage process should begin early in the claims process.

In many cases, salvage items are either destroyed to protect brands and labels or because of damaged goods clauses. Often the goods are left with the insured for a negotiated rate well below market value due to a limited pool of potential buyers for the items.

A wide range of items previously thought to be a total loss can frequently be sold as salvage goods. Items like the steel beams pictured here are normally sold as-is and often where they are physically located. 

Salvage best practices

When it comes to a successful salvage program, there are several best practices to consider:

1. Set agreed upon Key Performance Indicators (KPIs) to establish a baseline and set future salvage goals. These may include: cycle time, recovery vs. claim value, number of referrals, customer satisfaction, the number of bidders on each sale, etc.
2. Create a salvage checklist with items like questions to ask, special issues to consider, and storage considerations.
3. Act with urgency – Making decisions in a timely fashion can save storage costs, move the salvage items to the sales process faster and improve the recovery value.
4. Work with a vendor who understands the intricacies of salvage, the marketplace for salvage items, as well as disposal licensing and regulations for compliance, proper handling of hazardous materials, delabeling of items and the like.
5. Market the items with photos and descriptions, an experienced vendor will often be able to handle this aspect.

The gas plant pictured here was damaged in a hurricane and is up for auction as part of an insurance claim.

Following are some other items you probably didn't realize could be sold for salvage:

The dump truck

Items for salvage are frequently offered via an online auction. This dump truck is part of an insurance claim and sustained fire damage. It is not operational and the extent of the damage is unknown. 

Safety sign board

This safety sign board is also part of an insurance claim. It was involved in a collision and both the trailer and sign board sustained some damage. Many of the character boards are missing and the Plexiglas face of the sign is missing. The axle on the trailer is bent and cannot be towed. The full extent of damage is unknown and bidders are cautioned to review the photos and bid accordingly. 

Bidders on salvage items understand that they may not function, but often purchase them for replacement parts. 

Tractor 

Here is a tractor that sustained fire damage and is part of an insurance claim. The primary damage is on the top belt drive roll bearing on the left side and the tractor is not operational. 

Modular building

Items for salvage are frequently sold where they are and “as-is.” This modular building was in a collision and is lying on its side where it landed. Photos of the interior show it to still be in usable condition.

Cooling tower

This cooling tower was damaged while it was being loaded and moved. Again, the extent of the damage is unknown.

Light tower

This light tower located in Moore, OK, was stolen and recovered, but sustained some damage during the process. It is fully operational and is available as part of an insurance claim.

Shop equipment

This molding press machine was damaged when it fell from a forklift, bending the vertical side bars and fracturing the LCD control panel screen. The unit also sustained damage to the electrical wires and fluid hoses, and the full extent of the damage is unknown.

Not all salvage items are on the scale of those highlighted here. Salvage also includes smaller items such as apparel, computers, cell phones, and large and small electronics.

The October issue of Claims magazine will feature an in-depth look at the world of salvaged goods.

Photos courtesy of Liquidity Services, Inc.