Selling salvage by an insurer primarily affects what aspect of their financial responsibility?

When an insurer sells salvage, it primarily impacts the final incurred claims cost. The rationale behind this is that salvage refers to the value recovered from damaged property or assets after a loss has been incurred. When an insurer pays a claim and then sells the salvageable items, the proceeds from this sale reduce the overall amount that the insurer has ultimately paid out on the claim.

For instance, if an insurer settles a claim for a vehicle that is declared a total loss for $10,000 but subsequently sells the salvage for $3,000, the final incurred claims cost for that claim would be effectively $7,000. This recovery through salvage directly adjusts the expenses recorded against that claim, making it a crucial factor in assessing the total claims cost that the insurer ultimately bears.

The other options represent different financial aspects not directly altered by the salvage process. The total premium income pertains to the revenue generated from policyholders and isn't affected by claims handling. Underwriting expenses relate to costs incurred during the policy issuance and are also separate from the claims process. Finally, the marketing budget involves funds allocated for promoting insurance products, which does not change as a result of selling salvaged items.