There are three different types of institute cargo clauses in marine insurance: A, B, and C.
This post will explain what each clause entails, before exploring some of the key differences between them, to help you decide what sort of cover is right for you.
What Are Institute Cargo Clauses?
In a marine insurance policy, institute cargo clauses specify what is covered, and what is not covered, if a shipment is damaged or lost.
How Do Cargo Clauses Differ?
The different institute cargo clauses essentially outline just how much cover the policy provides. Clause A policies offer the most comprehensive cover, while Clause C policies are a lot more restrictive.
What Are The Different Institute Cargo Clauses?
In short:
- Clause A – The most extensive cover. This policy will provide cover for almost all potential risks, and any exclusions will be made clear in the policy wording. Clause A policies come with the highest premiums among the three clauses.
- Clause B – Intermediate cover for a moderate premium.
- Clause C – Highly restricted cover for the lowest premiums among the three clauses.
Institute Cargo Clause A
This is the broadest possible cover for your shipment. A Clause A policy may also be referred to as an “all risks” policy, as it will cover your cargo, its container, and your vessel for the majority of the risks you may face at sea. Any exclusions to the cover will be clearly outlined in the policy.
As it is the most comprehensive form of marine insurance, Clause A policies will invariably cost a lot more than Clause B and Clause C policies.
Institute Cargo Clause B
A Clause B policy is a lot more restricted than a Clause A policy. Rather than covering your entire cargo for “all risks”, a Clause B policy provides “named perils” cover. That is, cover for a specific set of risks, which might include loss or damage as a result of fire, explosion, collision, water damage, and so on.
Institute Cargo Clause C
A Clause C policy provides the most limited cover, yet this results in lower premiums. Usually, while Clause A and Clause B policies might cover a broad range of risks, Clause C policies will only cover situations that occur during carriage. This might include loss or damage caused by fires, explosions, collisions, sinkings, and so on.
What Cargo Clause is Right For Me?
It all depends on the nature of the cargo you are shipping, and the shipping route you use.
If you are shipping cargo on a safe shipping route, and the cargo has a relatively low value while carrying no inherent risks (such as risk of fire, explosion, or degradation), then even the basic coverage of a Clause C policy might be sufficient.
Yet if you feel you are likely to face risks that are not covered by a Clause C policy, you will need to instead choose a Clause B or Clause A policy. Clause A will provide the highest possible level of cover, but this will come at a price. If a Clause A policy provides cover that feel surplus to your requirements, then you may be able to get by with the intermediate level of protection provided by a Clause B policy.
Get Comprehensive Maritime Insurance Cover From James Hallam
If you cannot decide what sort of marine insurance policy is right for you, then we are here to help. Everard Insurance Brokers are the specialist marine trading division of James Hallam Limited who are accredited Lloyd’s brokers. We have a dedicated team of experienced insurance professionals who are committed to protecting your business and we have a deep understanding of every aspect of the maritime industry, and the various insurance implications.
We specialise in offering tailored marine insurance cover. Talk to us about your requirements, and we will help you decide whether you need a Clause A, Clause B, or Clause C policy.
Find out more about our specialist marine insurance services.