Marine Insurance and the Institute Cargo Clauses (ICC A, B, C)
Why every exporter and importer needs cargo cover
Road, rail, ocean, and air carriers are only liable for loss or damage to cargo up to the limits set out in the international conventions and acts that govern their trade. Because those limits rarely cover the full value of the goods, exporters and importers need a marine insurance policy to protect the shipment against loss or damage from the moment it leaves the exporter's warehouse until it reaches the importer's warehouse.
Who buys the policy — the exporter or the importer — depends on the Incoterms® 2020 rule agreed between the two parties.
Key Takeaways
● Carrier liability under international conventions is limited, so marine insurance closes the gap between that limit and the goods' full value.
● Whether the exporter or the importer buys the policy depends on the Incoterms® 2020 rule agreed in the sales contract.
● Open cover (blanket) policies insure a full year of shipments; specific policies insure a single shipment.
● ICC (A) offers the broadest cover at the highest premium; ICC (C) offers the narrowest cover at the lowest premium; ICC (B) falls in between.
● Always confirm exact terms, exclusions, and pricing with an insurance provider before shipping.
Risks Covered by Marine Insurance
A marine insurance policy typically protects against risks such as:
● Fire, explosion, and lightning
● Collision with another vehicle or an external object (other than water)
● Damage sustained during loading and unloading
● Hijacking of cargo
● Loss arising from discharge of cargo at a port of distress
● Total loss of a package washed or dropped overboard while loading or unloading
● Loss or damage from natural calamities, such as earthquakes or volcanic eruptions
● Overturning or derailment of surface transport such as trucks or rail wagons
● Theft or malicious damage
● The carrying vessel being stranded, grounded, or sunk
● General average sacrifice
● Cargo washed overboard
Types of Marine Insurance Policies
1. Blanket Cargo Insurance (Open Cover)
Covers all shipments made over the course of a year under a single policy, with a fixed sum insured and defined per-shipment and per-location limits.
2. Specific Policy
Covers a single, named shipment only.
Types of Coverage: The Institute Cargo Clauses (ICC)
The Institute Cargo Clauses (ICC) are the internationally recognized standard terms for marine cargo insurance, jointly published by the Lloyd’s Market Association (LMA) and the International Underwriting Association of London (IUA). The clauses in force today are the 2009 editions of ICC (A), ICC (B), and ICC (C), which replaced the 1982 versions and form the basis for cargo policies issued by insurers worldwide.
|
Clause |
Level of Cover |
Relative Premium |
|
ICC (A) |
Broadest cover of the three clauses, insuring against the widest range of risks. |
Highest |
|
ICC (B) |
Narrower cover than ICC (A), insuring a more limited set of named risks. |
Lower than ICC (A) |
|
ICC (C) |
The narrowest cover of the three, insuring only a minimal set of named risks. |
Lower than ICC (B) |
In short: ICC (A) gives the exporter or importer the most protection for the highest premium, while ICC (C) gives the least protection for the lowest premium, with ICC (B) sitting in between.
Getting Covered
Exporters, importers, and freight forwarders should speak directly with an insurance provider to arrange the right policy for a shipment — for example, ICICI Lombard, TATA AIG, or Allianz Insurance.
Frequently Asked Questions
Who is responsible for buying marine insurance — the exporter or the importer?
It depends on the Incoterms® 2020 rule used in the sales contract. That rule determines which party bears the risk of loss or damage during transit, and that party is typically the one who arranges (and pays for) the cover.
What is the difference between ICC (A), ICC (B), and ICC (C)?
They represent decreasing levels of cover for decreasing premiums. ICC (A) covers the widest range of risks and costs the most; ICC (B) covers a more limited, named set of risks at a lower premium; ICC (C) covers only a minimal set of named risks at the lowest premium.
Are the Institute Cargo Clauses an international standard?
Yes. They are jointly published by the Lloyd’s Market Association (LMA) and the International Underwriting Association of London (IUA), and the current 2009 editions are used as the basis for marine cargo policies by insurers around the world — making them the de facto global standard for cargo insurance wording.
What's the difference between an open cover policy and a specific policy?
An open cover (blanket) policy insures every shipment made over a year under one policy, with a fixed sum insured and per-shipment and per-location limits. A specific policy insures a single, named shipment only.
Does marine insurance cover theft or hijacking of cargo?
Yes — theft, malicious damage, and hijacking of cargo are among the standard risks a marine cargo policy is designed to cover.
Does marine insurance cover natural disasters?
Yes. Loss or damage caused by natural calamities such as earthquakes or volcanic eruptions is typically included as a covered risk.
How do I actually get a marine insurance policy?
Contact an insurance provider directly to discuss the shipment and choose the right clause and policy type — for example, ICICI Lombard, TATA AIG, or Allianz Insurance.