What Does Marine Cargo Insurance Actually Cover?

The Three Clause Sets: A, B and C — and Why the Difference Matters to You

The Institute Cargo Clauses (ICC) — A, B and C — are the foundation of almost every open-cover or voyage policy placed in the London market. They are not interchangeable, and the gap between them is not cosmetic. ICC (A) is the broadest: it covers all risks of physical loss or damage to your cargo unless a specific exclusion applies. ICC (B) and ICC (C) are named-perils policies — they only respond to the perils listed in the clause, and anything not on that list is simply not covered.

ICC (C) covers fire, explosion, vessel stranding, grounding, sinking or capsizing, collision, discharge at a port of distress, general average sacrifice, and jettison. ICC (B) adds earthquake, volcanic eruption, lightning, washing overboard, entry of sea water into a vessel or container, and total loss of a package lost overboard or dropped during loading. ICC (A) covers all of those plus theft, pilferage, leakage, breakage, contamination, and virtually any other fortuitous physical loss — subject to the standard exclusions.

The standard exclusions apply across all three clause sets and your underwriter will not waive them: wilful misconduct of the assured, inherent vice or nature of the subject matter, ordinary leakage or wear and tear, delay (even if caused by an insured peril), insolvency of the shipowner or carrier, and loss caused by nuclear or biological weapons. War and strikes are excluded under the base clauses but can be reinstated by attaching the Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo) — which most London-market open covers include as standard for an additional premium.

What the Carrier's Liability Does — and Does Not — Cover You For

Your bill of lading is a contract of carriage, not an insurance policy. Under the Hague-Visby Rules — which apply to most UK-origin shipments — the carrier's liability per package or unit is capped at a figure expressed in Special Drawing Rights. That cap is low relative to the value of most commercial cargo. If your goods are worth significantly more than the carrier's per-package limit, the difference is your uninsured exposure unless you have your own cargo policy.

The Hamburg Rules and the Rotterdam Rules extend carrier liability in some respects, but the UK has not ratified either, and most liner bills of lading are still written on Hague-Visby terms. Even where a carrier is liable in principle, proving negligence, pursuing a foreign shipowner through admiralty proceedings, and recovering across jurisdictions takes time and money your business may not have. Your cargo policy responds first; subrogation against the carrier is your insurer's problem, not yours.

General average is the mechanism by which all cargo interests on a vessel contribute proportionally to a sacrifice made to save the common adventure — a deliberate jettison, emergency port costs, salvage. Under the York-Antwerp Rules (the version incorporated into your bill of lading will specify which edition), you may be required to post a general average bond and cash deposit before your cargo is released. If you have ICC (A), (B) or (C) cover, your policy will pay your general average contribution and your sue-and-labour costs. Without a policy, that cash call lands directly on your balance sheet.

Open Covers, Voyage Policies and Declarations — Choosing the Right Structure

If you are shipping regularly — multiple consignments per month — an open cover is almost always the right structure. You agree the terms, conditions, commodity, packing, routing and limit with your broker once, then declare each shipment against the cover. This removes the risk of an uninsured gap caused by forgetting to place a voyage policy before a consignment departs. Most London-market open covers are placed on a 12-month basis with automatic renewal unless cancelled.

A voyage policy covers a single named shipment from a named origin to a named destination. It is appropriate for one-off or infrequent shipments, or for cargo that falls outside your open cover's commodity or routing scope. The risk with voyage policies is timing: cover must be bound before the goods are at risk. If your cargo is already loaded and you have not yet placed cover, your broker will need to disclose that to the underwriter — and the underwriter may decline or impose a warranty.

Whichever structure you use, the insured value should reflect the commercial invoice value plus freight and insurance costs, typically expressed as CIF plus an agreed percentage to cover your anticipated profit. Underinsurance is not just a claims problem — if you declare a value materially below the true value of the goods, your underwriter may apply average (proportional reduction) to any partial loss settlement.

What to Bring When You Ask Us to Quote

The more precisely you describe your cargo and transit, the more accurately we can structure your cover and negotiate your terms. Vague submissions produce wide exclusions and conservative deductibles. A well-prepared submission gets you competitive terms from specialist underwriters who understand your trade.

For an open cover, we will need the following from you before approaching the market:

• Full commodity description — generic terms like 'general cargo' or 'machinery' are not sufficient; underwriters need to know what the goods are, how they are packed, and whether they are new or used
• Annual estimated shipment value (or monthly average) and maximum any-one-vessel or any-one-location limit
• Typical routing: origin country, destination country, transshipment ports (e.g. Felixstowe, Rotterdam, Singapore PSA, Jebel Ali), and whether road or rail legs are included
• Mode of transport: FCL, LCL, RoRo, breakbulk, airfreight, or multimodal
• Any known accumulation risks — bonded warehouses, container freight stations, or consolidation hubs where multiple consignments may be held simultaneously
• Your existing bill of lading terms and any carrier liability waivers you have signed
• Claims history for the past three to five years, including any incidents that did not result in a formal claim

War, Strikes and High-Risk Routing: What Changes When Your Cargo Transits a War Zone

The Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo) are separate from the base ICC clause set and are subject to their own exclusions and cancellation provisions. War cover can be cancelled on 48 hours' notice by underwriters — a provision that becomes relevant when geopolitical conditions deteriorate rapidly, as they have in the Red Sea, Bab-el-Mandeb strait and Hormuz approaches in recent years.

If your cargo regularly transits areas listed under the Joint Cargo Committee (JCC) listed areas — which include parts of the Red Sea, Gulf of Aden, and certain West African coastal waters — your open cover should specify how war and strikes cover applies to those transits. Some open covers automatically include JCC-listed area transits; others require a separate declaration and additional premium for each voyage. Knowing which applies to your cover before you book a shipment is critical.

For cargo moving through UAE ports including Jebel Ali, or transiting the Strait of Hormuz, proximity war risk is a live consideration. Your broker should be asking the underwriter whether your open cover's war clause responds to loss caused by mines, derelict weapons, or state-sponsored interference with vessels in those waters — not just conventional war between named states.

Freight Liability and the Forwarder's Position

If you are a freight forwarder or NVOCC, your exposure is different from a pure cargo owner's. You may be liable to your customer for cargo loss under your trading conditions (BIFA, FIATA, or bespoke terms), but your ability to recover from the underlying carrier is limited by the same Hague-Visby caps that constrain any cargo owner. Freight liability insurance — sometimes called forwarder's liability or freight legal liability — covers your legal liability to your customers for cargo loss or damage arising from your own negligence or that of sub-contractors you have engaged.

Freight liability cover is not a substitute for cargo insurance. If your customer has their own ICC (A) open cover, their insurer will subrogate against you if your negligence caused the loss. Freight liability cover responds to that subrogated claim. If your customer has no cargo insurance and looks to you directly, freight liability cover responds to their direct claim. Both scenarios are real and both require adequate limits — which should be reviewed against your largest single consignment value, not your average shipment.

Frequently asked questions

Do I need marine cargo insurance if I am already covered by the carrier's liability?

The carrier's liability under Hague-Visby Rules is capped per package at a level that is almost certainly below the commercial value of your goods. It also requires you to prove the carrier was at fault — which takes time and legal cost. Your own cargo policy responds without you having to establish fault, and your insurer pursues the carrier on your behalf through subrogation. The two are not equivalent.

What happens if my cargo is damaged during loading or unloading rather than at sea?

ICC (A), (B) and (C) all cover the full transit from warehouse to warehouse — not just the sea leg. Damage during loading, discharge, or inland transit is within scope provided the cause is an insured peril under your clause set. Under ICC (A), accidental damage during stevedoring operations is covered. Under ICC (C), it would only be covered if it resulted from one of the named perils such as vessel collision or stranding.

How long does it take to bind an open cover through a London-market specialist?

For a straightforward commodity on a standard routing, we can typically obtain terms and bind cover within two to five working days of receiving a complete submission. Complex commodities, high-risk routings, or large annual values may require additional underwriter dialogue. A voyage policy for a single shipment can often be bound same-day if the goods are not yet at risk and the submission is complete.

What do you need from me to get a quote?

At minimum: a full commodity description including packing, your typical routing and modes of transport, your estimated annual shipment value or maximum any-one-vessel limit, and your claims history for the past three to five years. The more detail you provide, the more accurately we can negotiate your terms. Incomplete submissions result in wider exclusions and higher deductibles.

Does my cargo insurance cover general average contributions?

Yes — ICC (A), (B) and (C) all include general average and salvage charges adjusted or determined according to the contract of affreightment and/or applicable law and practice. If the vessel carrying your cargo declares general average and you are required to post a bond or cash deposit before your goods are released, your policy will cover your proportional contribution. Without a policy in place, that call falls directly on you.

What happens if my open cover is cancelled mid-shipment because of a war risk event?

The Institute War Clauses (Cargo) allow underwriters to cancel war cover on 48 hours' notice. However, cancellation does not affect cargo already at sea at the time of cancellation — those shipments remain covered until they reach their final destination or the policy's termination clause is triggered. The risk is for future shipments booked after the cancellation notice takes effect. This is why your open cover should specify a reinstatement or replacement mechanism, and why you should notify us immediately if you have shipments in transit when a cancellation notice is issued.