Marine Insurance

Differences between Institute Cargo Clauses A, B, and C

When shipping goods internationally, securing the right marine cargo insurance is non-negotiable.

At the heart of this protection are the Institute Cargo Clauses (ICC), the globally recognised standard policy wordings. The three main types—ICC A, ICC B, and ICC C—form the backbone of most cargo insurance policies.

But what exactly is the difference between them? Choosing the wrong one can leave your valuable shipment exposed to unforeseen risks or lead you to pay for coverage you don't need.

This guide will demystify ICC A, B, and C, providing a clear comparison to help you make an informed decision for your business.

What are Institute Cargo Clauses (ICC)?

Institute Cargo Clauses are standardised insurance policy wordings created by the Institute of London Underwriters (ILU).

They provide a clear and consistent framework for marine cargo insurance across the globe. Think of them as "off-the-shelf" policy templates that define exactly what is and isn't covered, removing ambiguity for shippers, freight forwarders, and insurers alike.

The most common versions are ICC A, B, and C, with ICC A providing the widest coverage and ICC C the most restricted.

The Core Difference at a Glance

The fundamental difference lies in the basis of coverage:

• ICC A: "All Risks" – Covers all risks of physical loss or damage to the cargo except for specific exclusions.
  
  

• ICC B & C: "Named Perils" – Only cover the cargo if it is lost or damaged by the specific perils listed in the clauses.
  
  

The following table provides a quick, scannable overview of the key differences.

Coverage For	ICC A (All Risks)	ICC B (Named Perils)	ICC C (Named Perils)
Fire & Explosion	Covered	Covered	Covered
Jettison & Washing O/B	Covered	Covered	Covered
Earthquake, Volcano, Lightning	Covered	Covered	Not Covered
Entry of Sea/Lake/River Water	Covered	Covered	Not Covered
Total Loss of Package O/B	Covered	Covered	Covered
General Average & Salvage	Covered	Covered	Covered
Negligence of Crew	Covered	Covered	Not Covered
Piracy	Covered	Covered	Not Covered
Theft	Covered	Not Covered	Not Covered
Breakage & Leakage	Covered*	Not Covered	Not Covered
Ordinary Losses (e.g., wear & tear)	Excluded	Excluded	Excluded
Inherent Vice	Excluded	Excluded	Excluded
Intentional Mismanagement	Excluded	Excluded	Excluded

*Covered unless due to an excluded cause like inherent vice.

A Deep Dive into Each Clause

1. Institute Cargo Clauses A (ICC A)

ICC A offers the most comprehensive level of protection. It is an "All Risks" policy, meaning it covers all risks of physical loss or damage to the subject matter insured, unless specifically excluded.

• Key Coverages: Theft, pilferage, non-delivery, breakage, leakage, water damage, fire, piracy, and many more.
  
  

• Main Exclusions: Willful misconduct of the assured, ordinary leakage or loss in weight/volume, inadequate packing, insolvency of the ship owners, delay, war and strikes (though these can often be added back).
  
  

• Best For: High-value goods, electronics, sensitive equipment, consumer goods, and any shipper seeking maximum peace of mind.
  
  

2. Institute Cargo Clauses B (ICC B)

ICC B moves from "All Risks" to a "Named Perils" basis. Your cargo is only covered if it is damaged by one of the perils explicitly listed in the clause.

• Key Coverages: Fire, explosion; vessel stranded/grounded/capsized; collision; discharge of cargo at a port of distress; earthquake, volcanic eruption, or lightning; general average sacrifice; jettison; washing overboard; entry of sea, lake, or river water; total loss of any package lost overboard or dropped during loading/unloading.
  
  

• What's Missing vs. ICC A: Theft of entire packages, piracy (though often added by insurers), and breakage/leakage that isn't a direct result of a listed peril (e.g., a vessel grounding).
  
  

• Best For: Bulk cargoes like coal or grain, robust goods where theft or breakage is less of a concern, or where a lower premium is a priority.
  
  

3. Institute Cargo Clauses C (ICC C)

ICC C provides the most basic level of named perils coverage. It is the most restricted form of standard marine cargo insurance and is often referred to as "Major Hazards Only" or "Fire and Collision" coverage.

• Key Coverages: Fire, explosion; vessel stranded/grounded/capsized; collision or contact with any external object; discharge of cargo at a port of distress; general average sacrifice; jettison.
  
  

• What's Missing vs. ICC B: Earthquake, lightning, water damage, washing overboard, and theft. This is a very significant reduction in coverage.
  
  

• Best For: Low-value, non-sensitive cargo where the shipper is only concerned with catastrophic events like a ship sinking or a major fire. It is not recommended for most general merchandise.

How to Choose the Right Clause for Your Shipment

Selecting between ICC A, B, and C depends on a risk assessment of your cargo and its journey.

1. Consider the Nature of Your Cargo: Is it fragile, high-value, or prone to theft (choose A)? Or is it robust and low-value (B or C might suffice)?
   
   

2. Evaluate the Transit Route: Are you shipping through high-piracy areas (requires A)? Are the seas and ports known for rough weather (B or A is better)?
   
   

3. Analyse Your Budget vs. Risk Appetite: While ICC C is the cheapest, it offers the least protection. The cost of a claim often far outweighs the premium savings of a lower clause. ICC A is generally recommended for most businesses as it provides true peace of mind.

Conclusion

Understanding the difference between Institute Cargo Clauses A, B, and C is crucial for protecting your financial interests in international trade. Remember:

• ICC A = All Risks (broadest coverage).

• ICC B = Named Perils (middle ground).

• ICC C = Major Hazards Only (most restricted).
  
  

When in doubt, opting for the wider coverage of ICC A is the safest choice. Always consult with a reputable insurance broker or marine insurance expert to discuss the specific needs of your shipment and ensure you are adequately protected against the unique risks it will face.

Ready to secure the right coverage for your cargo? 

Information needed to issue a Marine Caro Policy

1. A copy of Invoice
2. A copy of Packing List or details of packages like number of packages, total net wt., total gross wt., type of packing, contents of packages
3. INCO Term
4. A copy of GST Certificate 
5. A copy of PAN Card or a Copy of Certificate of Incorporation

WHAT IS OPEN MARINE INSURANCE?

Marine Open Declaration Policy enables you to insure all your goods in transit or shipment during the year under a single policy.

This policy is of a huge advantage for exporters, importers and logistic companies, for multiple transits during the year and a single insurance policy can cover loss or damage of the cargo for multiple transit.

Marine Open Declaration policy are of three types, covering movement of goods from one place to another.

• Within the country (Inland)
• From one Country to another Country (Export/ Import)

Highlights

1) The policy provides automatic and continuous insurance cover to a regular Exporter / Importer.

2) Trader's dealing with regular domestic despatches are also benefited by the open policy.

3) The premium under the open policy should be paid in advance on projected Sum Insured.

4) The projected sum insured should be at least 4 (four) times of the Single carrying Limit / Per Bottom Limit.

5) As per the terms of the policy, Insured is bound to declare each and every shipment without any exceptions.

6) The adjustment of premium and sum insured are done based on the submission of each declaration.

7) The Sum Insured under the open policy can be enhanced 4 (four) times in a year.

8) Omissions or incorrect declarations may be rectified even after the loss or arrival provided such omissions or errors were genuine.

9) Refund of premium on unadjusted Sum Insured is allowed to the insured after expiry of the policy.

WHAT RISKS DOES MARINE INSURANCE COVER?

All Risk as per ICC (A) / ITC (A) Basic Cover as per ICC (B) / ITC (B) – damage due to accident of carrying truck/conveyance & Fire during the course of journey.

Rate of premium depends on the proposed Terms of Cover viz. Basic Cover would be cheaper than All Risks cover. The following risks are covered on paying additional premium.

1) War & SRCC (Import & Export)

2) SRCC (Inland Transit)

3) Theft, pilferage & Non-delivery (TPND) in case of Basic Cover only

4) Additional storage cover before delivery of cargo at the final destination.

For more details regarding coverage, please refer to the clauses.

EXCLUSIONS: WHAT RISKS MARINE INSURANCE DOES NOT COVER?

Applicable to all policies.

1) Willful misconduct of the assured

2) Ordinary leakage in case of liquid cargo

3) Ordinary loss in weight

4) Ordinary wear & tear

5) Improper packing

6) Inherent vice

7) Insolvency of carrier

8) Deliberate damages

9) Nuclear weapons

10) Rats and vermin.

For a quick quotation for Marine Insurance, please feel free to call us.

Protecting Your Business:
The Importance of Safeguarding Export-Import Cargo and Transport Vehicles

In the dynamic world of international trade, businesses face numerous challenges that can jeopardize their operations.

Among these challenges, safeguarding export-import cargo and the vehicles used for transportation stands out as a critical concern.

While many companies focus primarily on protecting their cargo from theft, damage, or loss during transit, they often overlook the equally important aspect of ensuring that their transport vehicles are secure and well-maintained.

This article aims to highlight the significance of protecting both cargo and transport vehicles in the export-import business.

We will explore the risks involved, the benefits of comprehensive protection strategies, and actionable steps that businesses can take to mitigate these risks effectively.

1. Understanding the Risks

1.1 Cargo Risks

Cargo is vulnerable to various risks during transportation, including:

• Theft: High-value goods are prime targets for thieves.
• Damage: Poor handling or accidents can lead to significant losses.
• Loss: Misrouting or administrative errors can result in lost shipments.

1.2 Vehicle Risks

Transport vehicles also face their own set of risks:

• Accidents: Collisions or breakdowns can halt operations.
• Theft: Vehicles themselves can be stolen or vandalized.
• Maintenance Issues: Neglected vehicles can lead to costly repairs and delays.

2. The Interconnection Between Cargo and Vehicle Protection

2.1 How Vehicle Condition Affects Cargo Safety

A well-maintained vehicle ensures that cargo is transported safely and efficiently. Mechanical failures can lead to accidents that not only damage the vehicle but also compromise the integrity of the cargo.

2.2 The Role of Drivers in Protection

Drivers play a crucial role in safeguarding both cargo and vehicles. Their training, experience, and awareness can significantly reduce risks associated with transportation.

3. Benefits of Comprehensive Protection Strategies

3.1 Enhanced Security

Implementing robust security measures for both cargo and vehicles reduces the likelihood of theft and damage.

3.2 Improved Efficiency

Well-maintained vehicles lead to fewer breakdowns, ensuring timely deliveries and enhancing customer satisfaction.

3.3 Cost Savings

Investing in protection strategies can save businesses money in the long run by reducing losses from theft, damage, and operational delays.

4. Actionable Steps for Businesses

4.1 Conduct Regular Risk Assessments

Evaluate potential risks associated with both cargo and transport vehicles regularly to identify vulnerabilities.

4.2 Invest in Insurance Coverage

Ensure that you have comprehensive insurance policies that cover both cargo and vehicles against various risks.

4.3 Implement Security Measures

Utilize GPS tracking systems, alarms, and surveillance cameras to enhance security for transport vehicles.

4.4 Train Employees

Provide training for drivers on safe driving practices, vehicle maintenance, and cargo handling to minimize risks.

5. Case Studies: Success Stories in Protection Strategies

5.1 Company A: Implementing GPS Tracking

Discuss how Company A implemented GPS tracking for its fleet, resulting in reduced theft incidents and improved delivery times.

5.2 Company B: Comprehensive Training Programs

Explore how Company B’s investment in driver training led to fewer accidents and better cargo handling practices.

6. Conclusion

In conclusion, protecting export-import cargo is paramount; however, it is equally essential to ensure that transport vehicles are secure and well-maintained.

By understanding the interconnected risks associated with both aspects of transportation, businesses can implement comprehensive protection strategies that enhance security, improve efficiency, and ultimately save costs.