Institute Cargo Clauses are a component of marine insurance that was originally developed by the International Chamber of Commerce, a body governing businesses across the globe. These clauses were first introduced in 1982, but since then have altered in light of changes in global business, risk and threat levels.
These clauses are an integral part of cargo insurance and are something that every shipping company should be familiar with. There are three main categories of Institute Cargo Clauses: A, B, and C.
The Purpose of Institute Cargo Clauses
Within the context of marine insurance, Institute Cargo Clauses serve a specific purpose. This is to specify what is and is not covered when there is damage or loss to the shipment.
Cover can include anything from the cargo to the container that holds it and even the transportation used to ship said cargo. The difference in coverage is detailed by each different category of clause: A, B, and C. Clause C is the most restrictive of the three, with A being the broadest.
Institute Cargo Clause A
As stated above, Institute Cargo Clause A is the widest coverage you can purchase, also known as an ‘All Risks’ Cargo insurance policy. For this reason, it is the most expensive of the three.
What exactly does it cover? Clause A covers maximum risks. It can cover the cargo, container, and transportation, and any exclusions can be found in the General Exclusion Clauses.
Institute Cargo Clause B
This clause is a more restrictive kind of coverage. For this reason, you should expect to pay a moderate premium. In the case of this clause, you might only request for the more valuable items in your cargo to be covered or for partial cargo coverage.
Institute Cargo Clause C
This clause, of course, is the most restrictive of the three. It covers only very limited risks. Furthermore, most of the situations covered must happen during carriage. The main aspects of cover include:
- General average
- Fire / explosion
- Vessel grounding / capsizing
- General average sacrifice
The Differences Between Institute Cargo Clauses A, B, and C
The main differences between the three levels of Institute Cargo Clauses are what they cover, and in what circumstances said items are covered. Each clause sets forth detailed parameters for what it does and doesn’t cover. Because of the difference in cover the premium payable for each will vary.
Institute Cargo Clauses: Your Guide
Institute Cargo Clauses are an important part of marine insurance, and every company needs to remain informed when deciding which type of cover it wants or needs.