Institute Cargo Clauses (A), (B) and (C)
(A) is all risks. (B) and (C) cover only what they name, and (C) names the least.
The Institute Cargo Clauses are the standard London market wordings for goods in international transit, drafted originally by the Institute of London Underwriters and now maintained by the Lloyd's Market Association and International Underwriting Association through their Joint Cargo Committee. Indian insurers use them for import and export cargo. The current set dates from 1 January 2009, and comes in three levels: (A), (B) and (C).
The difference is the basis of cover. Clauses (A) are all risks: everything is covered except what is excluded. Clauses (B) and (C) are named perils: only the listed causes are covered. IRDAI's general insurance master circular asks every retail policy to state which of these two bases it uses, and the distinction decides who must prove what in a claim.
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What Each Level Covers
A tick means the loss is covered. Under (A) the list is illustrative: anything not excluded is covered.
Fire or explosion
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Vessel stranded, grounded, sunk or capsized
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Overturning or derailment of land conveyance
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Collision or contact of vessel with an external object other than water
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Discharge of cargo at a port of distress
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
General average sacrifice
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Jettison
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
Yes
Earthquake, volcanic eruption or lightning
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
No
Washing overboard
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
No
Entry of sea, lake or river water into vessel, container or place of storage
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
No
Total loss of a package lost overboard or dropped while loading or unloading
ICC (A)
Yes
ICC (B)
Yes
ICC (C)
No
Theft, pilferage, non-delivery, rough handling, rain damage
ICC (A)
Yes
ICC (B)
No
ICC (C)
No
Malicious damage by third parties
ICC (A)
Yes
ICC (B)
No
ICC (C)
No
| Cause of loss | ICC (A) | ICC (B) | ICC (C) |
|---|---|---|---|
| Fire or explosion | Yes | Yes | Yes |
| Vessel stranded, grounded, sunk or capsized | Yes | Yes | Yes |
| Overturning or derailment of land conveyance | Yes | Yes | Yes |
| Collision or contact of vessel with an external object other than water | Yes | Yes | Yes |
| Discharge of cargo at a port of distress | Yes | Yes | Yes |
| General average sacrifice | Yes | Yes | Yes |
| Jettison | Yes | Yes | Yes |
| Earthquake, volcanic eruption or lightning | Yes | Yes | No |
| Washing overboard | Yes | Yes | No |
| Entry of sea, lake or river water into vessel, container or place of storage | Yes | Yes | No |
| Total loss of a package lost overboard or dropped while loading or unloading | Yes | Yes | No |
| Theft, pilferage, non-delivery, rough handling, rain damage | Yes | No | No |
| Malicious damage by third parties | Yes | No | No |
Covered Under All Three
- check_circleGeneral average contributions and salvage charges incurred to avoid loss from a covered cause.
- check_circleThe insured's share of liability under a "both to blame collision" clause in the contract of carriage.
- check_circleReasonable costs of preventing or minimising a covered loss (the duty of assured clause), which are paid in addition to the claim.
Exclusions That Apply to All Three
These are excluded under (A) as well, which is why "all risks" never means every loss.
- Wilful misconduct of the assured
- No cover for loss the insured deliberately caused.
- Ordinary leakage, loss of weight or volume, wear and tear
- Losses that happen in normal transit are not fortuitous, so they are not insured.
- Insufficient packing
- Packing or preparation not fit to withstand ordinary transit.
- Inherent vice
- Loss from the nature of the goods themselves, such as fruit ripening and rotting.
- Delay
- Loss caused by delay, even if the delay itself was caused by an insured peril.
- Insolvency of the carrier
- Excluded where the insured knew or should have known of the carrier's financial default when loading.
- War, strikes and nuclear risks
- War, capture, mines and similar risks, and strikes, riots and civil commotion, are excluded from the cargo clauses and bought back under separate Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo). Nuclear and radioactive risks stay excluded with no buy-back.
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Choosing the Level
Clauses (A) suit manufactured goods, machinery and consumer products where theft and handling damage are real risks: the container of machinery from Hamburg to Nhava Sheva is almost always on (A). Clauses (C) suit bulk commodities such as coal, ore or fertiliser, where pilferage is not a concern and only a casualty to the ship would cause a large loss. Clauses (B) sit between, adding water entry and the natural perils.
The level often comes from the sale contract. Under Incoterms 2020 a CIF seller need only buy (C) unless the parties agree more, while a CIP seller must buy (A). A buyer importing machinery on CIF terms should therefore insist on (A) in the contract or buy top-up cover.
How IC-11 Tests This
Expect "which peril is covered under (B) but not (C)" (earthquake, washing overboard, water entry) and "which is covered only under (A)" (theft, malicious damage). Under all risks the insured need only show a loss happened in transit; the insurer must prove an exclusion. Under named perils the insured must prove a listed peril caused it. The trap is treating war or strikes as part of (A): they need their own clauses.
FAQs
What is the difference between ICC A, B and C?expand_more
ICC (A) is all risks, subject to exclusions. ICC (B) and (C) cover named perils only, with (C) the narrowest: it drops earthquake and lightning, washing overboard, water entry and packages dropped during loading, all of which (B) covers.
Is theft covered under Institute Cargo Clauses (B)?expand_more
No. Theft and pilferage are not named perils under (B) or (C). They are covered under (A), or by a separate theft, pilferage and non-delivery extension.
Are war and strikes covered under Institute Cargo Clauses (A)?expand_more
No. All three levels exclude war and strikes risks. They are covered by adding the Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo).
Which Institute Cargo Clause is required under CIF and CIP?expand_more
Under Incoterms 2020, CIF requires at least Clauses (C) unless the parties agree more, and CIP requires Clauses (A) or similar.
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