Brands and Labels Clause
The brands and labels clause allows the policyholder to remove brands, labels or other identifying marks from damaged goods before they are sold as salvage, protecting the policyholder's reputation against branded goods reaching the market at a discount.
- Clause type
- Extension
- Origin/Market
- International programme
- Favours
- Insured
- Negotiability
- Negotiable
Purpose
Damaged goods bearing a brand name or manufacturer’s guarantee can usually only be disposed of by the insurer as salvage. Without a specific agreement, however, the brand owner would risk damaged but still identifiable branded goods reaching the market at a discount under its own name, harming its reputation. The clause gives the policyholder the right to remove brands, labels or other identifying marks before disposal, or to stamp the goods as “salvage”.
Effect and limits
The insurer bears the cost of removal or re-labelling; in return, the salvage value of the goods is assessed on the basis of their condition after the marks have been removed, which typically reduces the salvage value the insurer may otherwise deduct. Where removal is not technically possible or uneconomic, the insurer instead bears the cost of disposal, with the policyholder deciding how disposal is carried out. If the insurer does not itself sell the salvage, it may deduct the assessed salvage value from the indemnity without having to take physical possession of the goods.
Negotiation and practice
For manufacturers and retailers of branded goods, the clause is an important reputational safeguard and should be actively negotiated, particularly for consumer goods, cosmetics, food and pharmaceutical products. It is worth clarifying whether the clause also applies to goods in outer packaging or containers from which the marking cannot be removed – some wordings provide for the contents to be transferred to plain containers in such cases.