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

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

The Institute Cargo Clauses are the standard terms used worldwide to define what risks are covered under a marine cargo insurance policy. 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)

Which Clause Should You Choose?

For most Malaysian and Singaporean exporters, ICC (A) is the right choice. Under Incoterms 2020, CIF requires only ICC (C) minimum cover while CIP requires ICC (A) all risks. See the Incoterms 2020 reference page.

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.