Institute Cargo Clauses A, B, C: Coverage and How to Choose

Key takeaways

• ICC (A) covers all fortuitous physical loss or damage except the listed exclusions (all-risks basis); ICC (B) and (C) cover only the named perils listed in the clauses.
• Under Incoterms 2020, CIF requires minimum cover in line with ICC (C) and CIP requires cover in line with ICC (A); the insured amount is at least 110% of the contract value.
• War and strikes risks need separate clauses (CL385 and CL386); always check the clause number and the duration of cover on the insurance certificate.

Institute Cargo Clauses (ICC) A, B and C are the standard wordings that define the scope of marine cargo insurance. The choice decides whether everyday losses such as theft or water damage are paid.

What Institute Cargo Clauses are

The Institute Cargo Clauses are maintained jointly by the Lloyd’s Market Association (LMA) and the International Underwriting Association of London (IUA). The current versions, CL382 (A), CL383 (B) and CL384 (C), came into force on 1 January 2009 and underpin most marine cargo policies worldwide. The English text governs, and the policy or certificate names the clause applied.

Coverage differences among ICC (A), (B) and (C)

ICC (A) works on an all-risks basis. It covers all fortuitous physical loss of or damage to the cargo except the exclusions in clauses 4, 5, 6 and 7: wilful misconduct of the assured, ordinary leakage or wear and tear, insufficient packing, inherent vice, delay, unseaworthiness, and war and strikes, among others. Theft, pilferage and non-delivery (TPND), rain or fresh-water damage and handling damage are therefore covered unless an exclusion applies.

ICC (B) and ICC (C) are named-perils wordings. Both cover fire or explosion; stranding, grounding, sinking or capsizing of the vessel or craft; overturning or derailment of land conveyance; collision or contact with any external object other than water; discharge at a port of distress; general average sacrifice; and jettison. ICC (B) adds earthquake, volcanic eruption or lightning; washing overboard; entry of sea, lake or river water; and total loss of any package lost overboard or dropped during loading or unloading. ICC (C) leaves these out and is the narrowest cover.

Type of risk	ICC (A)	ICC (B)	ICC (C)
Fire/explosion, stranding/sinking, collision, general average/jettison	Yes	Yes	Yes
Earthquake/lightning, washing overboard, seawater entry	Yes	Yes	No
Theft/pilferage/non-delivery, handling damage and other fortuitous risks	Yes	No	No

The exclusions apply in much the same way across all three. War and strikes are excluded unless the separate Institute War Clauses (Cargo) or Institute Strikes Clauses (Cargo) are added.

CIF, CIP and the insurance obligation

Under Incoterms 2020 only CIF and CIP put an insurance duty on the seller. CIF is limited to sea and inland waterway transport and requires minimum cover in line with Institute Cargo Clauses (C) or similar. CIP can be used for any mode and requires cover in line with Institute Cargo Clauses (A), a step up from Incoterms 2010, where CIP also needed only minimum cover. The insured amount must be at least 110% of the contract value, and the buyer must be able to claim directly from the insurer.

See the risk and cost transfer points in the Incoterms 2020 summary. For the transport documents, read Bill of Lading vs Sea Waybill, and for the invoice and packing papers used in a claim, see Commercial Invoice vs Packing List.

Insurance amount calculation example

For a CIF shipment with a contract value of USD 50,000, the minimum insured amount is 50,000 × 1.1 = USD 55,000. The certificate states this sum and the clause applied, for example Institute Cargo Clauses (C) CL384. If the loss falls outside the named perils of ICC (C), such as partial damage from seawater getting into a container, there may be no recovery. Exporters often upgrade to ICC (A) or add endorsements when the cargo or route calls for it, and price the extra premium in.

Duration of cover and claim preparation

Standard cover runs warehouse to warehouse: from the moment the goods are first moved in the warehouse or place of storage to start the transit until delivery to the final warehouse at destination. Cover also ends, if earlier, 60 days after the goods are discharged from the oversea vessel at the final port of discharge. A claim normally needs the insurance certificate, bill of lading, commercial invoice, packing list, survey report and evidence of the amount of loss. Under ICC (A), once the assured shows an accidental loss during transit, the insurer must prove that an exclusion applies; under ICC (B) or (C), the assured must prove that a listed peril caused the loss.

Common mistakes

A frequent error is assuming that a CIF sale automatically gives all-risks cover. The contractual minimum is only ICC (C), so theft, rainwater or ordinary handling damage may not be paid. Another is not checking the clause number (CL382, CL383 or CL384) on the certificate, or leaving out war and strikes cover when the voyage passes through higher-risk waters. Losses caused by insufficient packing or inherent vice stay excluded, so check packing and cargo characteristics before shipment.

FAQ

What is the main difference between ICC (A) and ICC (C)?

ICC (A) covers all fortuitous physical loss or damage except the listed exclusions, while ICC (C) covers only major named perils such as fire, sinking and collision. Theft or partial damage from seawater entry may be recoverable under ICC (A) but not under ICC (C).

Can the seller arrange broader cover under a CIF contract?

Yes. Incoterms set a minimum, so the parties may agree on ICC (A) or extra endorsements and reflect the premium in the price. The certificate must name the clause used.

Are war risks included in the basic clauses?

No. War risks need the Institute War Clauses (Cargo) CL385 and strikes risks need the Institute Strikes Clauses (Cargo) CL386. Check whether they have been added for routes through conflict areas.

How is the insured amount calculated?

Incoterms require a minimum of 110% of the contract value. A contract value of USD 50,000 means a minimum insured sum of USD 55,000; the contract may agree a higher percentage.

Sources

• Lloyd’s Market Association (LMA), Institute Cargo Clauses (A) CL382, (B) CL383 and (C) CL384, 1 January 2009
• International Underwriting Association of London (IUA), joint custodian of London market standard clauses
• ICC Incoterms 2020, seller’s insurance obligation (A5) under CIF and CIP. The rules text is the ICC publication