Brands and Labels Clause

A brands and labels clause is a property provision that protects an insured manufacturer or distributor's reputation when damaged-but-salvageable merchandise is disposed of after a loss. Insurers often recover part of a claim by selling damaged goods as salvage. If those goods still carry the insured's brand name, they could reach the market in substandard condition and harm the company's reputation. The clause gives the insured the right to remove or stamp out its brands and labels — or to relabel the goods — before they are sold, and it obligates the insurer to bear the reasonable cost of doing so, along with any loss in value that results.

For a small-business buyer that manufactures, packages, or distributes branded products — food producers, cosmetics makers, apparel brands, beverage companies — this clause is a meaningful reputational safeguard. Without it, water-damaged or smoke-tainted inventory bearing your name could appear on discount shelves and erode customer trust. The clause typically appears in commercial property and stock forms and works hand in hand with the insurer's subrogation and salvage rights, balancing the insurer's cost recovery against the insured's brand protection.

A practical nuance: the clause does not let you insist that all damaged goods be destroyed; it lets you strip identifying marks so the goods can be sold anonymously. The insurer usually pays the reduced salvage recovery or relabeling expense that results, but the insured must generally act reasonably and cooperate on how the salvage is handled. Buyers whose brand equity is central to their value — where reputation is the asset — should confirm the clause is present and understand it pairs naturally with a selling price clause for finished stock valuation. Document any goods you require to be de-branded to support the claim.