ADJUSTERSINTERNATIONAL.COM 3 Basic Principles The treatment of salvage under property insurance policies follows these basic principles: The owner of the property generally has the right to decide whether to retain the salvage itself but cannot require the insurer to take it. If the owner retains property with salvage value, that value will be debited from the insurer’s loss payment. If an insurer pays for a full loss to property, the insurer is entitled but not required to take possession of that property for salvage. However, the insurer cannot debit the loss payment for salvage and claim possession of the salvage. As an example, suppose a clothier experiences a water loss to garments and cannot sell them afterward at their full value. In some cases, the clothier would be able to retain the water-damaged garments and be compensated by the insurer for their loss in value plus extra expenses needed to dry them out and prepare them for sale at a marked-down price. Conversely, the clothier could choose to accept payment from the insurer for the full value of the garments. In almost all cases, the insurer would be entitled to take the garments and sell them to ofset its loss payment. This is typically done by salvors who recover and/or restore property and then earn a commission on its sale. In essence, salvage value amounts to the undamaged portion of a loss. These basic principles can be expressed as a simple equation: Insurance recovery = property damage plus expenses to recover or restore property minus value of salvage. Brands and Labels Coverage Clothiers are among the many vendors of wellknown “brand name” goods who are reluctuant or prohibited from selling damaged goods with their original labels, even if the goods have been refurbished. In anticipation of a potential loss, manufacturers, distributors, and vendors of brand name articles can purchase “brands and labels” coverage, typically provided as an endorsement to a property insurance policy. Alexandros Michailidis/Shutterstock.com
RkJQdWJsaXNoZXIy NjIxNjMz