How is salvage value typically determined?

• A. Based solely on the original sticker price minus depreciation.
• B. Through salvage auctions, salvage dealers, or estimated resale value; reflects condition and demand.
• C. Equals the vehicle's book value from the insurance company.
• D. Is determined by the repair shop's estimate.

Answer: (B)

Salvage value is the amount a damaged vehicle can fetch in the market after it’s deemed salvage. It comes from real sale channels—salvage auctions, salvage dealers, or an estimated resale value—and this amount reflects the car’s condition and current demand for its parts or rebuilt units. Because buyers care about what’s still usable, how much work is needed, and how many people want that make and model for parts or restoration, the salvage value can vary with market conditions.

This isn’t calculated simply from the original sticker price minus depreciation, which only estimates value before considering salvageability. It isn’t the insurer’s book value, which is a separate valuation used for a settlement framework. And it isn’t determined by the repair shop’s estimate, which focuses on cost to fix rather than the amount the vehicle could bring in salvage markets.