Institute War Clauses (Cargo) - What They Cover and Why You Need Them

Institute War Clauses (Cargo) - What They Cover and Why You Need Them

The Institute War Clauses (Cargo), designated CL385 and effective from 1 January 2009, are the standard London market clauses that provide coverage for loss or damage to cargo caused by war, civil war, revolution, rebellion, insurrection, or civil strife arising from these events. They are purchased separately from your standard marine cargo policy because the base Institute Cargo Clauses (A), (B), and (C) all explicitly exclude war risk.

For any Malaysian or Singaporean exporter shipping to or through a region of geopolitical tension - the Persian Gulf, the Red Sea, the Black Sea, West Africa - the War Clauses are not optional. Without them, if your cargo is seized, damaged in conflict, or hit by a floating mine, your standard cargo policy will not respond.

What the War Clauses Cover

CL385 covers loss or damage to the cargo caused by:

• War, civil war, revolution, rebellion, insurrection, or civil strife arising therefrom
• Any hostile act by or against a belligerent power
• Capture, seizure, arrest, restraint, or detainment arising from the above risks
• Derelict mines, torpedoes, bombs, or other derelict weapons of war
• General average and salvage charges incurred to avoid a loss from a covered peril

What the War Clauses Exclude

• Hostile use of atomic, nuclear, chemical, biological, biochemical, or electromagnetic weapons
• Ordinary leakage, ordinary loss in weight or volume, 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
• Unseaworthiness or unfitness of the vessel or container, where the assured is privy

The Two Critical Provisions You Should Know

The Automatic Termination Clause

War risk cover terminates automatically on the outbreak of war between any two or more of: the United Kingdom, the United States, France, the Russian Federation, and the People's Republic of China.

The 7-Day Cancellation Clause

Underwriters may cancel war risk cover by notice, with cancellation effective on the expiry of 7 days from midnight of the day notice is issued.

Cancellation does not apply to cover that has already attached before the notice takes effect. Cargo already in transit generally remains covered for that voyage.

How War Clauses Connect to JWC Listed Areas

Shipments to or through areas designated by the Joint War Committee (JWC) as "Listed Areas" typically trigger additional war risk premiums. The current JWC list designation is JWLA-033, effective 3 March 2026. See the JWC Listed Areas reference page.

FAQ

Does my standard cargo insurance cover war? No. All three ICC clauses explicitly exclude war risk. War cover requires CL385.

What happens to my war risk cover if a war escalates? The automatic termination clause cancels cover immediately if war breaks out between major powers. Underwriters can also cancel with 7 days' notice.

Is terrorism covered under the War Clauses? Terrorism is generally covered under the Strikes Clauses (CL386).

Do I need war cover for ASEAN shipments? For routes not transiting JWC Listed Areas, war risk is low but the premium is small. Most policies include it as standard.

Official Source

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