Institute Cargo Clauses A, B & C: What Each Covers & Excludes

Shipping container on a cargo ship with icons illustrating insurance coverage

Table of Contents

1. Introduction

2. What Are the Institute Cargo Clauses?

3. Institute Cargo Clause A: All Risks Coverage

4. Institute Cargo Clause B: Named Perils Protection

5. Institute Cargo Clause C: Limited and Cost-Effective Cover

6. Key Exclusions Across All Clauses

7. FAQs

Summary

Understanding the Institute Cargo Clauses—A, B, and C—is crucial for anyone shipping goods internationally. These provisions outline the coverage and exclusions of marine cargo insurance. Clause A offers broad “all risks” protection, Clause B provides named peril cover, and Clause C offers the most limited, cost-effective option. This guide explains what each clause includes, what it excludes, and how businesses can choose the right policy in 2025.

What Are the Institute Cargo Clauses?

The Institute Cargo Clauses (ICC), drafted by the London market, standardize marine cargo insurance terms globally. They define how much coverage a policy provides and under what conditions claims are valid.

The three main clauses differ by extent of cover and cost:

• Clause A: Broadest, “all risks” protection.

• Clause B: Intermediate, covering specific named perils.

• Clause C: Limited, basic protection for major perils only.

These distinctions help cargo owners balance premium costs with the level of risk they are willing to assume.

Institute Cargo Clause A: All Risks Coverage

Clause A provides the most extensive protection, often called “all risks.” It insures against nearly all accidental loss or damage unless specifically excluded. Coverage includes:

• Theft, pilferage, or accidental damage

• Natural disasters such as storms, floods, or lightning

• Vessel accidents like grounding, sinking, or collision

• Handling and loading incidents

Because of its wide scope, Clause A comes with the highest premium. It’s best for high-value or fragile cargo where owners want maximum peace of mind.

Institute Cargo Clause B: Named Perils Protection

Clause B provides intermediate coverage for a specific list of named risks. These typically include:

• Fire, explosion, or lightning

• Vessel stranding, sinking, or collision

• Jettison (intended disposal of cargo to save the ship)

• Water damage from seawater, sprinkler leakage, or heavy weather

• Natural disasters like earthquakes or volcanic eruptions

While cheaper than Clause A, Clause B does not cover accidental or unlisted events. It suits shipments where some risk tolerance is acceptable or where budget considerations limit full coverage.

Institute Cargo Clause C: Limited and Cost-Effective Cover

Clause C offers the most basic and affordable coverage. It protects against a narrow set of major risks occurring during transport, including:

• Fire and explosion

• Sinking, stranding, or capsizing of the vessel

• Collision or overturning of land transport

• Jettison or general average sacrifices

Since it excludes most incidental losses, Clause C is generally chosen for low-value shipments or where shipper and consignee are willing to accept higher risks.

Key Exclusions Across Institute Cargo Clauses

Regardless of whether you select Clause A, B or C, certain exclusions apply universally. These typically include:

• Natural deterioration or inherent defects in goods

• Wilful misconduct or negligence by the insured

• Loss from poor packaging or insufficient cargo preparation

• Transit delays or losses from strikes, piracy, confiscation, or war (unless specifically endorsed)

• Nuclear contamination or radioactive damage

Shippers often add endorsements or special policies to cover risks excluded under standard clauses.

FAQ's

1. What are the main differences between Clauses A, B, and C?

Clause A covers almost all risks (“all risks”), Clause B insures named perils, and Clause C only protects against a narrow list of major transport events.

2. Which clause is best for high-value shipments?

Clause A, as it provides the broadest protection against unexpected losses.

3. Can coverage be extended for Clauses B or C?

Yes. Insurers often provide add-on endorsements tailored to specific routes or cargo types.

4. Does Clause C cover storage?

No. Clause C typically applies only during carriage, not during storage at ports or warehouses.

5. Are Institute Cargo Clauses recognized internationally?

Indeed. Because ICC clauses are globally recognized, they represent the norm for rules pertaining to marine cargo.

Selecting the right Institute Cargo Clause is essential to balancing protection with cost. Clause A is the best choice for valuable or fragile goods, while Clause B offers mid-level cover for common risks. Clause C works for low-value shipments where cost is a priority.

By understanding exactly what each clause includes and excludes, businesses can choose the right marine insurance policy, minimize disputes, and manage shipping risks effectively in 2025 and beyond.