ICC (A), (B) and (C) are the three levels of cover in the Institute Cargo Clauses set. (A) covers all physical loss and damage except the expressly listed exclusions. (B) adds earthquake, lightning, water entry and packages dropped during loading to the major casualties in (C). (C) covers only major casualties such as fire, sinking, collision and overturning.
Why is the logic of the three clauses different?
The Institute Cargo Clauses are standard terms drawn up in the London insurance market that form the basis of most cargo transit policies worldwide. The current text is the version dated 1 January 2009; the 1982 version is still seen in some policies. (A) is based on an "all risks" principle: every sudden, externally caused loss or damage not written in the policy as an exclusion is covered. (B) and (C) are based on a "named perils" principle: only the events on the list are covered.
This difference also shifts the burden of proof. Under (A), the insured only has to show that the damage occurred during transit; proving an exclusion is up to the insurer. Under (B) and (C), the insured must prove that the damage resulted from one of the listed events.
Clause-by-clause comparison of cover
| Risk | ICC (A) | ICC (B) | ICC (C) |
|---|---|---|---|
| Fire, explosion | Yes | Yes | Yes |
| Vessel stranded, grounded, sunk or capsized | Yes | Yes | Yes |
| Overturning or derailment of a land conveyance | Yes | Yes | Yes |
| Collision of the conveyance with any external object other than water | Yes | Yes | Yes |
| Discharge at a port of distress | Yes | Yes | Yes |
| General average sacrifice, jettison | Yes | Yes | Yes |
| Earthquake, volcanic eruption, lightning | Yes | Yes | No |
| Washing overboard of cargo from the deck | Yes | Yes | No |
| Entry of sea, lake or river water into the hold, container or place of storage | Yes | Yes | No |
| Total loss of a package lost overboard or dropped during loading or unloading | Yes | Yes | No |
| Theft, pilferage, non-delivery | Yes | No | No |
| Breakage, crushing, rain and fresh water wetting, handling damage | Yes | No | No |
| Deliberate damage by a third party | Yes | By additional clause | By additional clause |
The general average contribution and salvage charges are paid under all three clauses.
What exclusions do the three clauses share?
- Wilful misconduct of the insured.
- Ordinary leakage, ordinary loss in weight or volume, ordinary wear and tear.
- Insufficient or unsuitable packing and stowage.
- Deterioration arising from the inherent nature of the goods.
- Delay and loss caused by delay.
- Insolvency or financial default of the shipowner or operator.
- Nuclear and radioactive weapons; war and strike risks are covered by separate clauses.
How war and strike cover works is explained in the war and strikes clauses entry, and other exclusions often seen in policies in the what cargo insurance does not cover entry.
How does it relate to Incoterms?
Under Incoterms 2020, the obligation to take out insurance lies with the seller in only two rules. Under CIF the minimum cover is ICC (C), under CIP it is ICC (A). Under both rules the sum insured must be at least 110% of the contract value. The parties may agree wider cover under CIF; if this is not written down, the buyer is protected only against major casualties. Details are in the difference between CIF and CIP entry.
Which clause for which cargo?
- ICC (C): Cargo with a low risk of breakage or theft and low value relative to its weight, such as bulk coal, scrap and sand.
- ICC (B): Cargo carried on open deck or exposed to water risk but not fragile; steel sections, timber.
- ICC (A): Machinery, electronics, pharmaceuticals, textiles, project equipment; any cargo exposed to handling and theft risk.
The premium difference is often smaller than the difference in cover; especially for containerised and general cargo, choosing (C) leaves the most common types of damage uncovered. For the choice of cover and how the policy is structured, see the cargo transit insurance page.
Frequently Asked Questions
Are ICC (A) and all risks the same thing?
Can ICC clauses be used for road transport?
Is rain damage covered under an ICC (B) policy?
Sources
- ICC – Incoterms® 2020 (ICC (C) cover under CIF, ICC (A) under CIP)
- Emtea Nakliyat Sigortası Genel Şartları (General Conditions of Cargo Transit Insurance, 11.05.2002) – Lexpera
- Lloyd's Market Association / IUA – Institute Cargo Clauses (A), (B), (C) 1/1/09