Institute Cargo Clauses (ICC)

The Institute Cargo Clauses are the London-market wordings on which most cargo insurance for US importers and exporters is written. The current set is dated January 1, 2009 and comes in three grades, (A), (B) and (C). They are not the International Chamber of Commerce, which shares the abbreviation and publishes Incoterms.

All risks vs named perils

• Clauses (A): clause 1 covers "all risks of loss of or damage to the subject-matter insured" except what clauses 4 to 7 exclude. You show that an accidental loss happened during the insured transit
• Clauses (B): named perils. Fire or explosion, stranding, sinking or capsizing, overturning of the land conveyance, collision, discharge at a port of distress, earthquake or lightning, washing overboard, entry of sea or river water, a package lost overboard or dropped in loading, and general average sacrifice or jettison
• Clauses (C): a shorter list, without earthquake, lightning, water entry, washing overboard or a package dropped in loading

Theft, pilferage, non-delivery, breakage, rough handling and rain or condensation damage are not on the (B) or (C) lists. Under (A) they are covered as accidental losses, subject to the exclusions.

What every grade covers and excludes

All three cover general average and salvage charges (clause 2) and the both-to-blame collision clause (clause 3). All three exclude the insured's willful misconduct, ordinary leakage and wear, insufficient packing (which expressly includes stowage in a container), inherent vice, delay, the vessel operator's insolvency where the insured should have known of it, nuclear risks, unseaworthiness the insured knew about, war and strikes. War and strikes cover is bought back with the Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo).

Warehouse to warehouse, and the 60-day limit

The transit clause (clause 8) starts cover when the goods are first moved in the origin warehouse for immediate loading and keeps it in force in the ordinary course of transit. It ends at the earliest of: unloading at the final warehouse named in the policy; unloading at any other warehouse the insured chooses for storage, allocation or distribution; the insured's decision to use a container or vehicle for storage; or 60 days after discharge from the ocean vessel at the final port. A container held at the port for two months can run out of cover before it is unpacked.

The clauses in sales contracts

Under Incoterms 2020 a CIF seller must insure on at least Clauses (C), or equivalent, for at least 110 percent of the contract price; a CIP seller must insure on Clauses (A). Under every other rule nobody is obliged to insure. A buyer on CIF terms who wants theft and breakage cover should ask for (A) in the contract or buy its own policy. A letter of credit often names the clauses the insurance document must show.

Why insure at all

The ocean carrier's liability under COGSA is capped at $500 per package and subject to the carrier's defenses. A policy on the clauses pays the agreed insured value, and the insurer then recovers what it can from the carrier. See how Airlift arranges cargo insurance.