GUIDE • INSURANCE-DAMAGED GOODS

Subrogation and salvage value – when stock is damaged

After fire, water or transport damage, goods may still have value. This guide explains the relationship between insurance compensation, subrogation and selling remaining stock – and how we can help.

Talk to us about your stock

Illustration of soot-affected building materials and palletised goods in a warehouse after a fire — Illustration: damaged goods may have salvage value, but their condition and safety need to be assessed.

Damage recovery and stock disposal – two stages after a loss

Early action after a fire or water leak can limit secondary damage and preserve the value of property. Damage recovery may include decontamination, cleaning and restoration. Once the damage has been assessed, some goods may instead be suitable for sale. This is where we can help: we explore purchasing and selling remaining stock in consultation with the owner and insurer.

What applies? Three separate issues

1. Insurance compensates for the loss

The business reports the damage and the insurer assesses compensation under the policy. Deductibles, coverage and the remaining value of the goods may affect the settlement. Purchasing the goods and paying insurance compensation are separate matters that need to be coordinated.

2. Subrogation concerns the damages claim

Once an insurer has compensated a loss, it can take over the insured party's right to claim damages from the party responsible. This applies to the portion of the loss covered by the insurance and paid by the insurer. Subrogation provides the basis for the insurer's recovery claim. Unlike a pledge, it does not in itself create security over the goods or permission to sell them.

3. Remaining goods may have salvage value

Goods that can safely and lawfully be handled and sold may generate proceeds and reduce the overall loss. This may involve a stock purchase or a sale to another buyer. Subrogation does not automatically make the insurer the owner of the goods. Ownership, authority to sell and treatment of proceeds in the insurance settlement need to be agreed with the owner and insurer before a sale.

Swedish legal basis for the insurer's right of recovery: the Insurance Contracts Act, Chapter 7 Section 9 and Chapter 8 Section 19. Agreed policy terms also need to be considered for business insurance.

From damage to a possible sale

Report and mitigate

Report the damage to the insurer and follow its instructions. Limit further damage without putting anyone at risk.
Document

Keep photographs, stock lists, quantities and damage details. Preserve evidence and any samples needed for the investigation before anything is moved or sold.
Confirm authority

Confirm ownership, who can authorise a sale and which conditions apply. Document the agreement with the parties involved.
Assess and sell

We assess purchase or resale options. Price, known damage, collection and accounting for proceeds are agreed before the transaction.

Illustration of reviewing stock lists, inventory and valuation information — Illustration: documentation and a salvage value assessment support an informed decision.

How Gustatempe can help

We help businesses and insurers explore how value can be recovered from damaged stock. Our role is the practical and commercial handling of the goods.

Reviewing stock lists, photographs, quantities and known condition.
Assessing salvage value and purchase or resale options.
Selling with clear information about known damage and agreed restrictions.
Planning collection and handling as agreed.

Not all damaged goods can be resold. Product safety, possible contamination and requirements for the relevant goods must be assessed. We handle stock disposal; the insurer decides on insurance compensation and any recovery claims.

See our example of selling fire-damaged stock

Do you have insurance-damaged stock?

Send a short description, photographs, approximate quantities and the location of the goods. Let us know whether the insurer has authorised disposal so we can agree on the next step.