All Risks Cargo Insurance vs FPA Cover UK

What Institute Cargo Clauses (A) Actually Covers

Institute Cargo Clauses (A) is the broadest standard form available in the London market. It operates on an all risks basis, meaning the underwriter covers all fortuitous physical loss or damage to your cargo unless a specific exclusion applies. The burden of proof sits with the underwriter to demonstrate that a loss falls within an exclusion, not with you to prove it falls within a named peril. That distinction matters enormously when you are dealing with a complex partial loss — condensation damage inside a reefer container, for instance, or impact damage to fragile goods during transhipment.

The exclusions that do apply under ICC (A) are not trivial. Inherent vice, inadequate packing, delay, wilful misconduct of the assured, and war and strikes (unless you buy back cover under the Institute War Clauses and Institute Strikes Clauses) are all carved out. The war exclusion is particularly relevant if your cargo transits through the Red Sea, Bab-el-Mandeb, or Strait of Hormuz, where war risk surcharges and separate war cover are now standard requirements rather than optional extras.

ICC (A) also incorporates the sue-and-labour clause, which obliges you to take reasonable steps to prevent or minimise a loss and gives you the right to recover those costs from underwriters. If your cargo is damaged at a port of refuge and you incur salvage or forwarding expenses, those costs are claimable — provided you have acted promptly and documented your actions. Failing to act, or failing to document, can prejudice your recovery even under the broadest form.

What FPA and ICC (C) Actually Cover — and What They Don't

Free from Particular Average is a pre-1982 concept that survives in practice through Institute Cargo Clauses (C), the most restrictive of the three standard forms. Under ICC (C), cover is limited to named perils: fire or explosion, vessel stranding, grounding, sinking or capsizing, overturning or derailment of land conveyance, collision or contact of the vessel with an external object, discharge of cargo at a port of distress, and general average sacrifice. Partial losses caused by anything outside that list — rough weather damage, theft, contamination, leakage — are simply not covered.

The practical consequence is stark. If a container of electronics is damaged by water ingress during a storm that does not cause the vessel to strand or sink, ICC (C) pays nothing. Under ICC (A), the same loss is covered subject to the all risks exclusions. For bulk commodities, project cargo, or goods that are inherently robust and whose primary risk is catastrophic vessel loss, ICC (C) can be a rational choice. For manufactured goods, perishables, or any cargo where partial loss is a realistic scenario, it is rarely adequate.

ICC (B) sits between the two: it adds theft, washing overboard, entry of sea water into the vessel or container, and total loss of any package during loading or unloading to the ICC (C) named perils. It is sometimes used for bagged commodities or break-bulk where the shipper wants protection against handling losses but is comfortable accepting the gap on weather-related partial damage. Understanding where your cargo sits in that spectrum is the starting point for any coverage conversation.

• ICC (A): all risks of physical loss or damage, subject to exclusions — broadest form
• ICC (B): named perils plus theft, washing overboard, sea water entry, and loading/unloading package loss
• ICC (C) / FPA equivalent: named perils only — fire, stranding, collision, general average — narrowest form
• All three forms exclude war, strikes, inherent vice, delay, and wilful misconduct as standard
• War and strikes cover must be bought back separately under the Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo)

General Average, Hague-Visby, and Why Your Cargo Clause Choice Interacts with Them

General average is one of the oldest principles in maritime law: when a sacrifice is made to save the common adventure — jettisoning cargo, for example, or the cost of a port of refuge — all parties whose property was at risk contribute proportionally. Under the York-Antwerp Rules (the version incorporated into your bill of lading will specify which edition), your cargo may be called upon to contribute to a general average fund even if it suffered no physical damage. Without adequate cargo insurance, you may be unable to provide the general average bond and guarantee that the carrier requires before releasing your goods.

Your bill of lading will also incorporate a carriage convention — most UK and EEA trades operate under Hague-Visby Rules, which cap the carrier's liability per package or per kilogramme at relatively modest levels. If your cargo is high-value, the carrier's liability cap will almost certainly be insufficient to cover your loss, and the difference falls on your cargo policy. This is why relying on the carrier's liability as a substitute for your own cargo cover is a false economy, regardless of which ICC form you choose.

The interaction between your cargo clause choice and these conventions is direct: if you are on ICC (C) and suffer a partial loss that does not qualify as a named peril, you cannot recover from underwriters, and the carrier's Hague-Visby cap may leave you significantly undercompensated. ICC (A) closes that gap for the covered perils. Your broker should be asking the underwriter to confirm that the policy responds on a warehouse-to-warehouse basis and that the Institute Classification Clause is noted, so cover does not lapse if the carrying vessel is outside the approved classification range.

Trading Areas, Transhipment, and War Risk Zones

If your cargo moves through a transhipment hub — Felixstowe, Rotterdam, Singapore's PSA terminals, or Jebel Ali — the warehouse-to-warehouse cover under ICC (A) should follow the goods through each leg automatically, provided the transit is continuous and within the policy period. Where transhipment introduces delay beyond the policy's transit time limit, or where goods are stored at an intermediate hub for reasons outside the ordinary course of transit, cover may suspend. Knowing your transit routing before you bind cover is not optional; it is the information your broker needs to ensure the policy wording responds to your actual supply chain.

War risk is a separate placement. The Joint Cargo Committee's listed areas — which currently include the Red Sea, Gulf of Aden, Bab-el-Mandeb, and parts of the Black Sea — attract additional premium and, in some cases, require underwriter approval before the cargo can be insured at all. If your routing changes after the policy is bound and the new route passes through a listed area, you are required to notify your broker immediately. Failure to do so can void the war cover and, depending on the policy wording, may affect the underlying ICC (A) cover as well.

For EEA-based shippers placing cover in the London market, the post-Brexit regulatory position means your policy is issued under English law and subject to the Marine Insurance Act 1906 as amended. The duty of fair presentation under the Insurance Act 2015 applies: you are required to disclose all material facts — commodity, packaging, stowage, routing, prior loss history — before inception. If a material fact is not disclosed and a claim arises, underwriters may have grounds to reduce or void the claim, regardless of which ICC form you are on.

What to Bring to Your Broker Before You Bind

The quality of the information you provide at placement directly affects the breadth of cover you receive and the speed of any claim settlement. Underwriters in the London company market and specialist cargo markets price and word policies based on the specific risk presented, not a generic commodity class. Vague descriptions — 'general cargo', 'machinery', 'consumer goods' — invite restrictive wordings and higher deductibles. Precise descriptions invite competitive terms.

For a single-shipment policy, your broker needs the commodity description, packing method, vessel name and flag, bill of lading number, port of loading and discharge, transhipment points, declared value (including freight and insurance, typically CIF plus an agreed percentage), and any special conditions in your sale contract — particularly whether you are buying on CIF or FOB terms, since that determines who has the insurable interest at each stage of transit.

For an open cover or annual declaration policy, the underwriter will want your annual turnover by commodity and trade lane, your loss history for the past three to five years, your packing and quality control procedures, and any contractual requirements imposed by your buyers or lenders. If your bank or letter of credit requires ICC (A) cover with war and strikes, that requirement must be reflected in the policy wording — not assumed.

• Commodity: full description, HS code if available, packing method and container type
• Voyage: vessel name, flag, classification society, ports of loading, transhipment and discharge
• Value: CIF value plus agreed uplift percentage, currency of claim settlement
• Contract terms: CIF, FOB, DAP — who holds insurable interest and at what point it passes
• Loss history: claims paid and reserved for the past three to five years
• Special requirements: letter of credit conditions, buyer or lender requirements, any ICC (A) mandates

Choosing Between All Risks and FPA: A Practical Framework

The default for most manufactured goods, perishables, pharmaceuticals, electronics, and any cargo where partial loss is a realistic scenario is ICC (A) with war and strikes bought back. The additional premium over ICC (C) is, in most cases, modest relative to the cargo value and the cost of an uninsured partial loss. The question to ask is not 'can I save premium by going to ICC (C)?' but 'what is the realistic loss scenario for this commodity on this route, and does ICC (C) respond to it?'

ICC (C) or ICC (B) can be appropriate for bulk dry commodities — grain, coal, ore — where the primary risk is catastrophic vessel loss and the commodity is inherently robust. It can also be appropriate where a buyer's letter of credit specifies a minimum clause and you are covering the residual risk above the carrier's liability. In those cases, the narrower form is a deliberate, informed choice, not a default.

If you are a freight forwarder placing cover on behalf of cargo owners, your freight liability policy — typically structured around the BIFA Standard Trading Conditions or CMR for road freight — does not substitute for the cargo owner's own ICC cover. Your liability as a forwarder is capped, and the cargo owner's recourse against you is limited. Ensuring your clients understand that distinction, and that they have their own cargo cover in place, protects both parties.

Frequently asked questions

Do I need ICC (A) if my sale contract is on FOB terms?

On FOB terms, the insurable interest in the cargo passes to the buyer at the ship's rail at the port of loading. If you are the seller, you may have no insurable interest in the main voyage — but you do have an interest in the pre-shipment leg to the port. If you are the buyer on FOB terms, you are responsible for arranging cargo cover from the moment the goods pass the ship's rail, and ICC (A) with war and strikes is the standard expectation for most trade finance and letter of credit purposes. Confirm the precise point of risk transfer in your sale contract before assuming cover is in place.

What happens if my cargo is damaged during transhipment at a hub port?

Under ICC (A), damage during transhipment — including handling damage, theft, or contamination at an intermediate hub — is covered provided the transit is continuous and within the policy period. Under ICC (C), damage during transhipment is only covered if it results from a named peril such as fire or the overturning of a land conveyance. If your supply chain involves multiple transhipment legs, ICC (A) is almost always the appropriate form, and your broker should confirm that the policy wording extends to cover storage at intermediate hubs in the ordinary course of transit.

How long does it take to bind a single-shipment cargo policy?

For a straightforward shipment on a standard commodity and route, cover can typically be bound within one working day of receiving complete information. Complex or high-value shipments, unusual commodities, or routings through war risk zones may require additional underwriter review. The critical point is that cover must be bound before the goods are at risk — ideally before they leave the warehouse of origin. Do not assume that cover can be backdated after a loss has occurred.

What do you need from me to get a quote?

At minimum: a full commodity description and packing method, the vessel name and classification society, ports of loading and discharge including any transhipment points, the declared value in your chosen currency, your sale contract terms (CIF, FOB, etc.), and your loss history for the past three to five years. For an open cover or annual programme, we will also need your estimated annual shipment volume by trade lane and any contractual requirements from your buyers, lenders, or letters of credit.

Does my cargo policy cover general average contributions?

Yes — under ICC (A), ICC (B), and ICC (C), the policy covers your proportion of a general average sacrifice or expenditure declared under the York-Antwerp Rules, provided the loss was not caused by your own fault. The policy will also cover the cost of providing a general average bond and guarantee to the carrier, which is required before your goods are released at the port of discharge. This is one of the reasons why having your own cargo policy — rather than relying on the carrier's liability — is essential even for robust bulk commodities.

If I am a freight forwarder, does my liability cover replace the cargo owner's ICC policy?

No. Your freight liability cover — whether structured under BIFA Standard Trading Conditions, FIATA rules, or CMR for road legs — caps your liability as a forwarder at levels that are almost always well below the full cargo value. The cargo owner's recourse against you is limited by those caps, and any shortfall is their uninsured loss. Cargo owners should always hold their own ICC cover. As a forwarder, you should make this clear in your trading conditions and, where you are arranging cover on a client's behalf, confirm in writing which ICC form applies and that war and strikes cover is included if required.