Institute Cargo Clauses (A), (B), and (C) - Explained

Institute Cargo Clauses (A), (B), and (C) - Explained

Your CIF contract says you have fulfilled your insurance obligation. Your buyer assumes everything is covered. Your broker confirms "standard cargo policy in place". None of those statements tells you which Institute Cargo Clause is on your certificate — and the difference between ICC (A) and ICC (C) is the difference between a USD 500,000 claim paid in full, a five-figure partial recovery, or nothing at all if the cause of loss happens to fall outside the narrow perils ICC (C) names. Most CIF contracts default to ICC (C) because Incoterms allow it. The 2020 Incoterms changed which clause is the legal minimum for CIP. Most contracts have not caught up.

The Institute Cargo Clauses are published by the Lloyd's Market Association (LMA) and the International Underwriting Association of London (IUA). The current versions — ICC (A) clause number CL382, ICC (B) clause number CL383, and ICC (C) clause number CL384 — all took effect on 1 January 2009 and replaced the 1982 editions. Nearly every marine cargo policy written anywhere in the world uses one of these three clause sets as its coverage foundation.

Understanding which clause applies to your shipment is not a technicality. It determines whether your policy pays out when your cargo is damaged by seawater, stolen from a container, or lost in a rollover incident. The difference between ICC (A) and ICC (C) can be the difference between a full claim recovery and no recovery at all.

What Each Clause Covers

ICC (A), ICC (B), and ICC (C) are structured as three tiers of coverage, from broadest (A) to most limited (C).

ICC (A) - CL382 - "All Risks" Coverage

ICC (A) is the broadest level of cover available under the Institute Clauses framework. It is structured on an "all risks" basis, which means it covers all causes of loss or damage to the cargo except those specifically excluded in the clause wording. If a risk is not listed as an exclusion, it is covered.

ICC (B) - CL383 - Named-Perils Coverage (Intermediate)

ICC (B) is a named-perils policy. It only covers losses caused by specific perils listed in the clause.

ICC (C) - CL384 - Named-Perils Coverage (Restricted)

ICC (C) is the most restricted level of cover.

Notably, ICC (C) does not cover earthquake, volcanic eruption, lightning, washing overboard, or water entry - all of which are covered under ICC (B).

Comparison Table

What All Three Clauses Exclude

• Wilful misconduct of the assured
• Ordinary leakage, ordinary loss in weight or volume, or ordinary wear and tear
• Insufficiency or unsuitability of packing or preparation
• Inherent vice or nature of the cargo
• Delay, even if caused by an insured risk
• Insolvency or financial default of vessel owners, managers, charterers, or operators
• Atomic or nuclear weapons
• Unseaworthiness where the assured is privy
• War, civil war, revolution (covered under Institute War Clauses)
• Strikes, riots, terrorism (covered under Institute Strikes Clauses)

ICC (A), (B), and (C) protect cargo interests. They do not replace carrier, charterer, or vessel-owner P&I insurance. For the vessel liability side, see P&I Insurance Malaysia & Singapore.

Which Clause Should You Choose?

For nearly every Malaysian or Singaporean exporter and importer, ICC (A) is the right choice. The case for stepping down to ICC (B) or ICC (C) is almost always a misreading of what the contract actually requires versus what the cargo actually needs. Four scenarios cover most of the buyer decisions we see, framed by cargo type and Incoterm.

Palm oil exporter shipping CIF Port Klang to Rotterdam

Under Incoterms 2020, CIF only obliges the seller to procure ICC (C). ICC (C) does not cover theft, pilferage, non-delivery, water entry, washing overboard, or earthquake. Palm oil in flexitanks or drums is exposed to seawater contamination, container-cleanliness defects, and rough handling during transshipment — none of which trigger ICC (C). If your buyer takes possession on a CIF basis and the contract specifies ICC (C), you have technically complied. You have also handed your buyer a policy that does not pay out for the most likely losses on that route. The fix: upgrade to ICC (A) at your own cost and recover the difference through pricing, or renegotiate the contract to CIP with ICC (A) as the bound minimum. The premium difference on a USD 2 million palm oil shipment is typically USD 400 to USD 800. The claim difference on a single loss is six figures.

Electronics importer buying CIP Penang to a US distributor

Since 1 January 2020, CIP requires the seller to procure ICC (A) as the minimum, not ICC (C) as it did under Incoterms 2010. This is the single largest change in the 2020 revision. If your existing supplier contracts predate 2020 and still reference CIP without specifying the ICC level, your seller may be quoting on the old basis and procuring ICC (C). Two things to check before shipment: does the current contract reference Incoterms 2020 explicitly, and does the insurance certificate on file name CL382 (ICC A) or CL384 (ICC C). If the certificate names CL384, the contract is non-compliant with Incoterms 2020 and the cover is materially narrower than the parties have negotiated.

Rubber or palm kernel cake exporter shipping FOB to a buyer in India

Under FOB, the buyer is responsible for arranging insurance. Many Malaysian FOB exporters assume their obligation ends at the ship's rail. It does — but if the buyer fails to procure cover, or procures inadequate cover, the seller can be left holding the bag if the goods are damaged after loading but before the buyer takes physical delivery (e.g. during a transshipment delay or pre-discharge incident). Two protective moves: require the buyer to provide a copy of the insurance certificate before sailing as a contractual condition, and arrange contingent cover for your own balance-sheet risk if the buyer's certificate is not forthcoming or names a clause you do not recognise.

General cargo importer choosing the cover level on a new placement

If you are placing your own cover and you are not contractually bound to a specific ICC level, the answer is almost always ICC (A). The premium delta between ICC (A) and ICC (C) on a typical Malaysian or Singaporean container shipment is small — often 15% to 30% of the standard premium. The peril delta is enormous: theft, pilferage, water entry, malicious damage, rough handling, and "all other causes not specifically excluded" are all in ICC (A) and all absent from ICC (C). The only circumstances where stepping down to ICC (B) or ICC (C) makes sense are bulk commodities with very low intrinsic theft risk (e.g. iron ore in dedicated bulk carriers) and shipments where the contract counterparty mandates the level and refuses to pay for an upgrade.

For the contract-by-contract obligation breakdown across all 11 Incoterms 2020 — including the CIF / CIP shift and what the nine non-insurance terms mean for gap risk — see our Incoterms 2020 and cargo insurance responsibility guide.

FAQ

What is the difference between ICC (A), (B), and (C)? ICC (A) is all risks; ICC (B) and (C) are named-perils. ICC (B) covers more perils than ICC (C).

Does ICC (A) cover everything? No. It has specific exclusions including wilful misconduct, inherent vice, delay, war, and strikes.

Which ICC clause for electronics? ICC (A). Electronics are vulnerable to water, theft, and handling damage.

Does my ICC clause cover war or strikes? No. War requires CL385; strikes requires CL386.

Are the 1982 clauses still valid? The 2009 editions (CL382/383/384) are the current standard.

Official Source

Published by the Lloyd's Market Association (LMA) and International Underwriting Association of London (IUA). Current editions: 1 January 2009. Copyright LMA and IUA.