Three friends, Mr. Ashok, Mr. Lalit, and Mr. Hari-teamed up to start a lobster export business. Mr. Ashok owned a boat which was used in the business for fishing as well as for transporting the processed lobsters to fore

The term 'salvage' refers to partially damaged property that remains after an insured event. The duty of an insurer pertaining to salvage is primarily linked to the principle of subrogation and indemnity. The insurer is entitled to the salvage (the remaining property) only after they have made the full payment for the loss incurred to the insured. This means that if the insurer indemnifies the insured for the full value of the lost or damaged property, they then acquire the rights to the salvage. The purpose is to prevent the insured from profiting from the loss (violating the principle of indemnity) and to allow the insurer to recover some of their payout by selling the salvage. In this specific case, the insurer retrieved the vessel and offered it for sale as salvage. However, the problem states that the insurer refused payment of the entire claim amount and only made partial payment. If the insurer has not fully indemnified the insured for the loss of the boat, then the insurer does not yet have the right to claim the salvage. Taking over the ship for salvage without fully indemnifying the insured (especially when the claim is disputed due to fraud) would be a violation of the insurance contract. If the insurer believes there was fraud, their primary action should be to repudiate the claim entirely based on the breach of utmost good faith. If they choose to make a partial payment, it must be clearly defined what part of the loss is being indemnified, and their right to salvage would only arise from the portion of the loss for which they have provided full indemnity. In a situation of suspected fraud, the insurer should reject the claim and not take possession of the salvage until the matter is legally resolved, as taking salvage implies acceptance of liability to some extent.