Institute Cargo Clauses A, B and C: the practical differences
Compare the 2009 Institute Cargo Clauses through water, handling and theft examples, and understand the shared transit terms, exclusions and expense cover.
On this page
Clauses A start with a broad grant for loss or damage, while B and C identify insured causes. B lists more risks than C. The letter alone does not decide a claim: exclusions, transit terms, evidence and policy amendments still matter.
What you will learn
- Distinguish the all-risks approach from the named-causes approach in the 2009 clauses.
- Recognise the limits of B’s water-ingress and dropped-package provisions.
- Apply the common transit and exclusion framework without treating every loss as insured.
The letter describes a different starting promise
A case is damaged while a warehouse forklift moves it. The shipment is insured, the value is sufficient and the loss occurred during transit. Those facts are important, but the cause of damage still has to fit the cover purchased.
Institute Cargo Clauses (A), (B) and (C) are different standard wordings, not three percentages of compensation. This guide compares the editions dated 1 January 2009: CL382, CL383 and CL384 respectively. Particular policies can amend them or use other editions.
A uses an all-risks approach to loss or damage, subject to its exclusions. B and C identify causes of loss, with B having a longer list. Before comparing a particular claim, establish the actual wording and any endorsements.
What the basic comparison looks like
The following table describes selected starting points under clause 1. Each entry remains subject to causation, exclusions and the rest of the contract. It is not a promise of payment whenever the event’s name appears in a report.
| Event or issue | A | B | C |
|---|---|---|---|
| Fire or explosion | Consider under the broad grant | Listed cause | Listed cause |
| Vessel casualty, such as stranding or sinking | Consider under the broad grant | Listed cause | Listed cause |
| Land transport overturns or derails | Consider under the broad grant | Listed cause | Listed cause |
| Transport strikes an external object other than water | Consider under the broad grant | Listed cause | Listed cause |
| Earthquake, volcanic eruption or lightning | Consider under the broad grant | Additional listed causes | No equivalent independent entry |
| Cargo washed overboard | Consider under the broad grant | Express entry | No equivalent independent entry |
| Specified water enters the transport or storage space | Consider under the broad grant | Sea, lake or river water specified | No equivalent independent entry |
| Package lost overboard or dropped during vessel/craft loading or unloading | Consider under the broad grant | Specific package-total-loss provision | No equivalent independent entry |
| Theft as the cause presented | Consider under the broad grant | Not a standalone named cause | Not a standalone named cause |
C also includes cargo unloading at a port of distress, general average sacrifice and jettison. The table selects the differences most often misunderstood; it does not replace the complete wording.
Why A is broader without being unlimited
Under A, an insured does not begin by selecting one of B or C’s listed causes. It still needs to establish the relevant loss within the insured adventure, and the exclusions remain material. A shortage, a damaged package and a late delivery are not interchangeable pieces of evidence.
The other policy terms can matter just as much as the broad grant. A certificate may refer to additional exclusions or commodity-specific conditions. The goods, insured interest and transit must match. Calling a placement “all risks” cannot answer those questions on its own.
B and C also have a specific exclusion for deliberate damage by a wrongful act which is not reproduced in the same general form in A. That difference does not make deliberate conduct irrelevant under A: its own exclusions, including the assured’s wilful misconduct and separate war/strikes provisions, still apply.
B’s additional handling provision is quite narrow
B’s clause 1.3 concerns total loss of a package lost overboard or dropped while loading onto, or unloading from, a vessel or craft. It does not say that every handling mishap is covered.
These invented examples show the distinction:
- A case is dropped from a sling during vessel loading and is totally lost. B’s specific provision calls for examination on those facts.
- A forklift dents one panel of a machine while moving it inside a warehouse. That is neither automatically a package total loss nor necessarily vessel loading or unloading. The label “handling damage” does not establish B cover.
- A package is partially damaged during vessel discharge. Its location in the operation alone does not satisfy a provision expressly concerning package total loss. Other insured causes would need separate consideration.
Under A, the broad loss-or-damage grant may provide a different starting point. In each case the actual cause, extent and exclusions still need evidence.
“Water damage” is not a sufficient description
B identifies entry of sea, lake or river water into the specified transport or storage spaces. Condensation, rain penetration and a leaking water system cannot simply be relabelled as that entry of water.
Suppose, in an invented shipment, an inspection finds moisture on metal components. The investigation should establish where it came from and what happened during the journey. A report that identifies river-water ingress describes a different mechanism from one identifying condensation inside inadequately prepared packing.
The absence of an independent water-ingress entry in C also needs careful reading. If damage is attributable to another insured cause, such as a qualifying vessel casualty, that is a separate route through its wording. A comparison chart should therefore explain the cause being tested rather than state that C can never involve wet goods.
The shared terms still shape the claim
All three have clause 2 provisions for qualifying general average and salvage charges. An insured contribution can be relevant even when the claimant’s own goods arrive undamaged. These expenses are a different enquiry from direct physical damage to those goods. The general average guide explains the adjustment and security, while marine salvage explained follows the reward for assistance to property in danger.
They also share the 2009 transit framework. Cover follows ordinary transit and ends at the earliest applicable termination event; the overseas-discharge deadline is not an automatic period of free distribution storage. The interest requirement at the time of loss and duties concerning mitigation and third-party rights remain important too.
Our cargo insurance guide explains the journey, insured interest and valuation questions. A broader list of causes does not compensate for the wrong insured party or a loss outside the insured transit.
Exclusions and extra cover require their own attention
The wordings retain exclusions for matters such as ordinary wear, inherent vice and delay-caused loss, with their stated qualifications. The packing provision depends on the preparation, who performed it and its timing; independent-contractor involvement does not automatically dispose of every exclusion question.
War and strikes risks are separately addressed. Any additional cover must be identified on its actual terms, including duration and cancellation provisions. It should not be assumed to follow every detail of the main cargo cover.
A further distinction concerns delay. Insurance can remain in force during a qualifying interruption while loss caused by the delay remains excluded. The question “was the policy still running?” is different from “is this cause insured?”
Use the comparison to describe the exposure clearly
The practical value of A/B/C knowledge is being able to explain what protection has been requested and where a foreseeable loss might fall outside it. Fragile components with repeated handling, bulk commodities and machinery intended for prolonged storage do not present identical needs.
Sale obligations are relevant but do not replace that assessment. Under Incoterms 2020, CIF and CIP use different default insurance levels, subject to permitted agreement. Meeting a sale term’s default is not, by itself, a full assessment of the buyer’s commercial exposure.
Bring the goods, packing, route, handling and storage into the insurance submission. If a loss occurs, cargo-claim evidence helps connect the observed damage with the mechanism that the wording requires.
Preparing for P&IQ or ICS?
Build on what you have learned with structured P&IQ and ICS study, question practice and mock exams.
Explore exam preparation