Cargo Theft & Pilferage Cover: UK Marine Policy

How the Institute Cargo Clauses Treat Theft

The Institute Cargo Clauses (A), (B) and (C) are the standard framework for marine cargo cover in the UK market, and they treat theft very differently from one another. ICC (A) is an all-risks wording: it covers theft and pilferage unless a specific exclusion applies. ICC (B) and ICC (C) are named-perils wordings, and theft does not appear on either list. If your goods are moving under ICC (B) or (C) — common on bulk commodities, project cargo, or where underwriters have restricted terms — a theft loss is simply not covered unless you have negotiated a specific theft extension.

This distinction matters most when your freight forwarder or carrier books cover on your behalf under their own open cover. Their policy may default to ICC (C) for certain commodity types or trade lanes. You should always ask for a copy of the certificate of insurance and confirm the clause basis before your goods leave the warehouse. If the certificate reads ICC (C), your theft exposure is uninsured.

Even under ICC (A), the exclusions can bite. The deliberate damage exclusion, the inherent vice exclusion, and — critically — the insufficiency of packing exclusion all give underwriters grounds to resist a theft claim where goods were poorly secured, inadequately containerised, or where the loss is attributed to the consignee's own employees. The burden of proof that a theft occurred, rather than a shortage arising from packing error, sits with you as the cargo owner.

Pilferage: The Partial-Loss Problem

Pilferage claims are disproportionately contested because they are hard to prove at the point of discovery. A container arrives short by ten cartons. The seal is intact. The bill of lading shows the full quantity shipped. Underwriters will ask whether the shortage occurred before stuffing, during transit, or at unstuffing — and your answer needs to be supported by tally records, CCTV, and a surveyor's report commissioned promptly on discovery.

Under ICC (A), pilferage is covered as a subset of theft, but the practical challenge is establishing that a theft actually occurred rather than a packing discrepancy. Your broker should be asking the underwriter at placement whether the policy includes a shortage clause or a weight and measurement clause, and whether a survey requirement is triggered below a certain threshold. These are negotiating points, not standard terms.

High-pilferage commodities — electronics, pharmaceuticals, spirits, tobacco, fashion goods — attract specific underwriting scrutiny. Expect underwriters to ask about your stuffing and sealing procedures, whether you use high-security ISO 17712-compliant seals, and whether your supply chain includes any transshipment at known high-risk ports. If your goods regularly move through ports with elevated theft indices, your open cover rate will reflect that, and you should budget for it rather than be surprised at renewal.

What Your Policy Should Cover — and What It Typically Excludes

A well-structured ICC (A) open cover for a UK or EEA cargo owner should address theft and pilferage across the full transit, from warehouse to warehouse, including inland legs. The warehouse-to-warehouse clause in ICC (A) extends cover through the ordinary course of transit, but it has time limits once goods arrive at the destination port — typically 60 days in storage. If your goods sit in a bonded warehouse beyond that period, you need a storage extension or a separate stock-throughput policy.

The following are typically covered under a properly structured ICC (A) theft extension:

• Theft of an entire container or unit load from a terminal, depot, or in-transit vehicle
• Pilferage of part-loads where theft can be evidenced by survey or tally discrepancy
• Forced entry into a sealed container where physical evidence of tampering is present
• Theft during transshipment at intermediate ports, including ro-ro operations
• Theft from bonded warehouses within the policy's storage time limits

Common Exclusions and Coverage Gaps to Address at Placement

The exclusions that most frequently defeat theft claims are not obscure — they are standard ICC exclusions that cargo owners overlook until a claim arises. Insufficiency or unsuitability of packing is the most commonly cited. If your goods were not packed to a standard that would withstand the ordinary rigours of the insured transit, underwriters will argue that the loss arose from packing failure, not theft. This is particularly relevant for palletised goods on open flatbeds or goods stuffed into containers without adequate dunnage.

The wilful misconduct exclusion and the delay exclusion are also worth understanding. If theft is facilitated by an employee of the insured — including a contracted packing agent — the wilful misconduct exclusion may apply. The delay exclusion means that consequential losses arising from a theft (missed production deadlines, contractual penalties) are not recoverable under a cargo policy; those exposures sit in a separate freight liability or trade credit structure.

The following are typically excluded and require separate negotiation or standalone cover:

• Theft by the insured's own employees or agents (requires a crime or fidelity policy)
• Mysterious disappearance where no evidence of theft exists
• Shortage claims on bulk cargo where weight-on-outturn is the only evidence
• Consequential loss, delay, or loss of market following a theft
• Theft of cash, negotiable instruments, or documents of title (requires specialist cover)

Open Cover vs Voyage Policy: Structuring Your Programme

If you are moving cargo regularly — as a freight forwarder, importer, or vessel operator carrying third-party goods — an open cover is almost always the right structure. You declare shipments against the open cover as they arise, and the policy responds automatically provided the declaration falls within the agreed commodity, trade lane, and sum insured parameters. This removes the risk of an uninsured shipment because you forgot to bind a voyage policy before departure.

Your open cover should include a held-covered clause for shipments that inadvertently exceed the declared parameters — for example, a consignment that transships through a port not listed in the original schedule. The held-covered clause preserves your cover subject to prompt notification and any additional premium, rather than leaving you exposed because a routing changed at short notice.

At renewal, bring your full claims history, your commodity breakdown by value and trade lane, and any changes to your supply chain — new suppliers, new ports of loading, new transshipment hubs. Underwriters price theft exposure on the specific combination of commodity, routing, and loss history. A clean record on a high-risk commodity is worth presenting clearly; a deteriorating record needs to be accompanied by a risk improvement narrative, not left to speak for itself.

Sue and Labour, General Average, and Your Obligations After a Theft

The sue-and-labour clause in your cargo policy requires you to take reasonable steps to avert or minimise a loss, and it entitles you to recover the reasonable costs of doing so from underwriters. In a theft context, this means engaging a surveyor immediately on discovery, filing a police report, notifying the carrier and terminal operator in writing, and preserving all evidence. Failure to act promptly — waiting several days before notifying your broker, or allowing the container to be re-stuffed before a survey — can give underwriters grounds to reduce or resist the claim.

General average is less commonly triggered by theft, but it can arise if a vessel suffers a casualty during a voyage on which your cargo has also been stolen or pilfered. Under the York-Antwerp Rules, general average contributions are assessed on the value of cargo that arrives safely. If your cargo has been stolen and you cannot demonstrate its value at the time of the general average act, your contribution calculation becomes contested. Your cargo policy should include a general average and salvage clause that responds to your GA contribution even where the underlying loss is a theft.

If you are a freight forwarder operating under BIFA standard trading conditions or a similar liability framework, your liability to cargo owners for theft is capped — but that cap does not protect you from a cargo owner who has their own ICC (A) policy and whose insurer pursues a subrogated recovery against you. Ensure your freight liability cover is aligned with your cargo clients' policy terms, and discuss the interaction with your broker before a claim arises.

Frequently asked questions

Do I need ICC (A) to be covered for theft, or will ICC (B) do?

You need ICC (A) for theft and pilferage cover. ICC (B) and ICC (C) are named-perils wordings and theft does not appear on either list. If your current certificate shows ICC (B) or (C), your theft exposure is uninsured unless a specific theft extension has been added by endorsement. Always check the clause basis on your certificate before shipment.

What happens if my cargo arrives short but the container seal is intact?

An intact seal complicates a pilferage claim but does not automatically defeat it. Underwriters will look at tally records at origin and destination, CCTV from the stuffing location, and the surveyor's report. High-security seals that show no sign of tampering shift the argument towards a packing discrepancy rather than theft. Engaging a surveyor immediately on discovery and commissioning a joint tally with the carrier's representative is essential. Prompt notification to your broker triggers the sue-and-labour obligation and preserves your right to recover survey costs.

Does my cargo policy cover theft by a warehouse employee or a contracted packing agent?

No. Theft by the insured's own employees or agents falls under the wilful misconduct exclusion in standard ICC wordings. This exposure sits in a crime or fidelity guarantee policy, not a marine cargo policy. If you use third-party packing or warehousing contractors, check whether their liability insurance responds to employee theft and whether your cargo policy includes any back-to-back protection for that scenario.

How long does it take to bind an open cover with theft cover included?

For a straightforward commodity on established trade lanes with a clean loss record, a specialist broker can typically obtain indicative terms within a few working days and bind cover shortly after. More complex programmes — high-value electronics, pharmaceutical cold chain, or routes that include elevated-risk transshipment ports — take longer because underwriters will want to review your supply chain documentation, packing procedures, and claims history before quoting. Starting the renewal process at least four to six weeks before expiry gives you time to negotiate rather than simply accept whatever terms are offered.

What do you need from me to arrange or review my cargo theft cover?

To review your existing cover or arrange a new programme, bring your current policy or open cover certificate (including the clause basis and any endorsements), a commodity description and annual shipment values by trade lane, your claims history for the past three to five years, and details of your packing, sealing, and warehousing procedures. If you are a freight forwarder, your standard trading conditions and any carrier contracts are also relevant. The more detail you provide upfront, the stronger the submission we can put to underwriters on your behalf.

If my goods are stolen during transshipment at a foreign port, am I still covered?

Under a properly structured ICC (A) open cover with a warehouse-to-warehouse clause, theft during transshipment at an intermediate port is covered, provided the transshipment port is within the agreed trading limits and the goods are moving in the ordinary course of transit. If the transshipment port is outside your declared schedule — for example, a routing change imposed by the carrier — the held-covered clause should protect you, provided you notify your broker promptly and pay any additional premium required. Transshipment at ports with elevated theft risk may attract a specific additional premium or condition at placement.