Institute cargo clauses are a set of standardised guidelines used worldwide to define the coverage provided under marine cargo insurance.

The three main types of institute cargo clauses:

• Institute Cargo Clause A (ICC-A)

• Institute Cargo Clause B (ICC-B)

• Institute Cargo Clause C (ICC-C)

Marine cargo clauses provide consistency in insurance contracts across countries by clearly defining protections, exclusions, and responsibilities. The standardisation helps importers, exporters and insurers work with a common understanding, making global trade safer, faster and more transparent.

Who issues Institute Cargo Clauses?

These clauses were introduced in 1982 to bring consistency to global marine insurance practices. They are published by the International Underwriting Association of London to ensure they stay aligned with modern shipping risks. Their origin dates back to the need for a uniform system to reduce confusion among buyers, sellers, and insurers in international trade.

Institute Cargo Clause A

Scope of coverage

The institute cargo clause A provides the extensive coverage among all three. It follows an “All-Risk” approach, covering almost every accidental loss unless specifically excluded. This makes it the strongest safeguard for cargo owners.

Key features

The ICC A clause in marine insurance includes protection against theft, pilferage, rough handling, weather-related damage and other unforeseen transit risks. The coverage extends well beyond basic marine perils, protecting goods that require the utmost care.

When businesses choose ICC A

Companies rely on the ICC A clause when transporting high-value, fragile or sensitive cargo. It is also preferred for routes involving multiple handling points or unpredictable weather conditions, where exposure to loss is higher than usual.

Institute Cargo Clause B

Coverage level

The institute cargo clause B limited coverage as compared to clause A. It covers certain named risks but not everything included in ICC A. It excludes minor handling damage and some theft-related losses, making it less comprehensive but still reliable.

Situational usage

Businesses choose ICC B cover in marine insurance when they want a balanced plan that protects against major incidents such as fire, explosion, earthquakes, or vessel accidents, without paying for a full all-risk policy.

Common industries using ICC B

Manufacturers and traders dealing with bulk goods, semi-finished materials or moderately durable items often prefer ICC B. It works well for stable shipping routes with fewer uncertainties.

Institute Cargo Clause C

**Basic level coverage

The institute cargo clause C provides the least coverage compared to clause A. It provides essential protection against major accidental events such as fire, collision, or capsizing. It does not cover minor damage or loss resulting from rough handling.

**Limitations

ICC C has the narrowest coverage of all three clauses. It excludes many risks covered under A and B, making it unsuitable for fragile, expensive or highly exposed cargo.

**When ICC C is sufficient for cargo owners

Cargo owners choose ICC C when shipping low-value or bulk commodities on shorter and safer routes. The limited coverage allows them to keep insurance costs low while still meeting minimum protection needs.

Fire and Explosion

All three institute cargo clauses - A, B, and C - cover losses due to fire and explosion. A fire or explosion can occur on the vessel or in the cargo hold. Any accidental loss or damage to goods during transit is typically covered under standard marine cargo clauses.

Vessel or Craft Stranding, Grounding, Sinking

Institute cargo clauses cover damage caused when a ship runs aground, strands on a reef, or sinks mid-voyage. These perils often lead to total or partial loss of cargo, and ICC A, B, and C include this coverage to protect the cargo owner.

Collision or Contact with External Objects

When the vessel collides with other ships, port structures, or foreign objects and causes cargo damage, it falls under this clause. All three ICC versions cover this peril, although associated exclusions may differ depending on the clause.

General Average and Salvage Charges

Cargo owners must share costs if cargo is voluntarily jettisoned to save a voyage. ICC A, B, and C include coverage for general average contributions and charges related to salvaging operations to protect the entire shipment.

Theft, Pilferage and Non-Delivery (under ICC A Clause)

Only the institute cargo clause A provides coverage for theft, pilferage, and non-delivery. Clauses B and C do not protect against these losses, making ICC A ideal for shipments where theft or misplacement is a concern, especially in high-risk ports.

Natural Calamities and Weather Perils

Events like earthquakes, volcanic eruptions, lightning, and severe storms are covered under ICC A and B. Clause C does not cover natural disasters, making it less suitable for shipments exposed to unpredictable weather or seismic activity.

Jettison and Washing Overboard

All three clauses cover jettison, when goods are deliberately thrown overboard to save the ship, and washing overboard due to rough seas. This protects cargo owners from losses during rough weather or emergency responses at sea.

• Delay- Financial loss caused solely by delay in delivery is excluded, even if it results from an insured event.

• Ordinary Leakage or Wear and Tear- Shrinkage, evaporation, or general wear and tear during transit is not covered, as it is considered normal.

• Loss Due to Intentional Misconduct- Any damage or loss caused by the wilful misconduct or fraudulent behaviour of the insured is not covered.

• Loss Due to Insufficient Packing- Damage resulting from poor or inadequate packaging is excluded, especially when the packaging was under the insured's control.

• Inherent Vice- Loss arising from the natural deterioration or inherent qualities of the goods, such as rust, mould, or decay, is not covered.

• War and Strikes Exclusions- Loss or damage caused by war, strikes, riots, or civil unrest is not included under standard clauses and must be insured separately.

• War Risk Clauses- These clauses offer protection against losses caused by war, invasions, or hostile acts during sea voyages, which are excluded from the standard ICC.

• Strikes Clauses- They cover cargo loss or damage resulting from strikes, locked-out workers, or labour disturbances not included in the regular ICC policy.

• Institute Classification Clause- Ensures that shipments are carried only on vessels classified under approved shipping registers to maintain safety and insurability standards.

• Institute Replacement Clause- Covers the cost of replacing damaged parts rather than compensating based on total loss, especially useful for machinery and equipment shipments.

• Inland Transit (Rail or Road) Clauses- Extends coverage to goods transported by road or rail within a country before or after the main marine voyage.

• Strikes, Riots and Civil Commotion Clauses- These provide specific protection against cargo losses due to strikes, riots, or civil unrest that disrupt the shipping or handling process.

• Limitation of Liability (Inland Transit) Clause- Caps the insurer’s liability for cargo damage during inland transit to a pre-agreed limit, reducing risk exposure on domestic legs.

• Institute Radioactive Contamination Exclusion Clause- Excludes any loss or damage caused by radioactive contamination, nuclear fuel, or nuclear waste, due to extreme and uninsurable risks.

• Cargo Nature and Vulnerability- Fragile, high-value, or perishable goods attract higher premiums due to increased risk of damage or loss.

• Trade Route and Geopolitical Factors- Shipments through high-risk zones, such as conflict areas or piracy-prone waters, lead to higher insurance costs.

• Packaging Quality- Poor or inadequate packaging increases the likelihood of claims, which directly affects premium rates.

• Mode of Transport- Air, road, rail, and sea each carry different risk levels, influencing how the premium is calculated.

• Previous Loss History- A record of frequent or high-value claims may result in higher premiums to offset increased risk.

• Type of ICC Clause Chosen (A, B, or C)- Comprehensive cover under ICC A clause costs more than limited protection under ICC B or ICC C.

• Documentation Needed- Essential documents include the insurance policy, bill of lading, commercial invoice, packing list, and surveyor’s report to initiate the claim.

• Surveyor Involvement- An independent surveyor assesses the damage, records findings, and issues a report that supports the claim process.

• Role of Incoterms- Incoterms (International Commercial Terms) define whether the buyer or seller holds the insurance and claims responsibility at the time of loss or damage.

• Common Claim Settlement Challenges- Delayed intimation, missing documents, unclear liability, or inadequate packaging often delay or deny claims.

• Tips to Ensure Smooth Claim Processing- Notify the insurer immediately, preserve evidence, maintain proper documentation, and work with a qualified freight forwarder or broker.

• Choosing lower coverage to save cost- Selecting minimal protection may reduce premiums, but it increases risk exposure in case of serious cargo damage.

• Ignoring exclusions- Many assume coverage is universal. However, institute clauses in marine insurance clearly list several exclusions, which must be reviewed closely.

• Not understanding warehouse-to-warehouse coverage- Some assume end-to-end protection, but institute marine cargo clauses may limit coverage based on transit timelines and delivery points.

• Poor packaging- Even with coverage, claims can be denied if goods were not packed to withstand standard transit conditions.

• Assuming “all risk” means no exclusions- "All risk" under the institute cargo clause A still excludes common issues like delay, wear and tear, or inherent vice.

• Risk tolerance- Companies with low risk tolerance should choose broader coverage, like ICC A clause, to minimise potential financial losses.

• Importer/exporter experience level- First-time exporters or importers may prefer simpler, all-inclusive cover to avoid handling claims and logistics complexities.

• Cargo sensitivity- Fragile, perishable, or high-value goods require comprehensive protection under a suitable institute cargo clause.

• Cost vs coverage balance- Businesses must evaluate premium costs against potential risks. Higher coverage reduces exposure but increases insurance expenses.

• Transit complexity- If the transit involves multiple stops, transshipments, or inland movements, a wider cargo clause in marine insurance is recommended

Choosing the right institute cargo clause is not just about compliance; it is about securing every shipment with confidence. From ICC A’s broad protection to ICC C’s basic coverage, your marine cargo insurance strategy must align with risk, cargo type, and transit complexity.

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