When engaging in import-export activities, cargo insurance is an essential “shield” that protects businesses from financial losses during long and complex transportation journeys. However, many companies feel confused when encountering terms like Clause A, Clause B, and Clause C in insurance contracts.
These clauses are standardized under the Institute Cargo Clauses (ICC) issued by the London insurance market. Understanding each coverage scope helps businesses optimize costs while ensuring maximum protection for their shipments.
1. Clause C (Institute Cargo Clauses C) – Basic Coverage
Clause C provides the narrowest coverage and comes with the lowest premium. It operates on a named-perils basis, meaning compensation is only provided if the loss is caused by specifically listed risks.
Covered risks include major catastrophic events such as:
- Fire or explosion occurring on the vessel or transport vehicle
- Transport accidents: vessel grounding, sinking, capsizing; land transport overturning or derailment
- Collision: with any external object (excluding water)
- Discharge at port of refuge due to emergency situations
- General Average sacrifice: contribution when cargo must be sacrificed to save the vessel
- Jettison: cargo thrown overboard to protect the voyage
👉 This option is suitable for low-risk goods or bulk commodities where cost optimization is a priority.
2. Clause B (Institute Cargo Clauses B) – Extended Coverage
Clause B also operates on a named-perils basis but offers significantly broader protection than Clause C.
In addition to all Clause C risks, Clause B covers:
- Natural disasters: earthquakes, volcanic eruptions, lightning
- Washing overboard: cargo swept off the deck by waves
- Water ingress: seawater, lake water, or river water entering containers or cargo holds
- Total loss of packages: due to cargo falling overboard during loading/unloading
👉 Suitable for medium-risk shipments or routes with higher exposure to environmental hazards.
3. Clause A (Institute Cargo Clauses A) – All Risks Coverage
Clause A provides the most comprehensive and premium-level protection.
Unlike Clauses B and C, Clause A follows the “All Risks” principle, meaning:
👉 The insurer compensates for all loss or damage unless it falls under general exclusions.
Additional risks covered under Clause A (not included in B & C):
- Theft, pilferage, or non-delivery
- Physical damage: scratches, dents, breakage during normal transport
- Moisture damage, condensation, odor contamination from other goods
👉 Ideal for high-value, fragile, or sensitive goods such as electronics, medical equipment, or consumer products.
4. Critical Notes Businesses Must Remember
Even under Clause A, insurers will deny claims if losses fall under the following general exclusions:
⚠️ 1. Improper Packing
No compensation if damage is caused by inadequate packaging or poor cargo securing by the shipper.
⚠️ 2. Inherent Vice
Natural characteristics of goods (e.g., evaporation, rust, self-deterioration) without external impact are not covered.
⚠️ 3. Delay
Financial losses caused by delivery delays—even if due to insured risks—are not compensated.
⚠️ 4. War & Strikes Risks
All ICC clauses (A, B, C) exclude:
- War, civil unrest
- Strikes, riots
👉 Businesses must purchase additional coverage:
- Institute War Clauses
- Institute Strikes Clauses
⚠️ 5. Accuracy & Transparency
All declared information (cargo type, value, route, vessel name) must be 100% accurate. Any misrepresentation may void the policy.
Conclusion
Choosing between Clause A, B, or C depends on:
- Nature of goods
- Transport method
- Shipping route
- Risk tolerance
👉 For example:
- Medical equipment → Clause A (maximum protection)
- Bulk commodities like iron ore → Clause C (cost-effective option)
At SONGWIN INTERNATIONAL LOGISTICS VIETNAM, we not only provide optimal logistics solutions but also offer expert consultation to help businesses choose the most suitable insurance coverage. With deep knowledge of international trade standards, our team ensures every shipment arrives safely, securely, and profitably.
Contact Us
📍 Address: 344 Nguyen Trong Tuyen Street, Tan Son Hoa Ward, Ho Chi Minh City
📞 Hotline (24/7): 083.681.3969 - 0373.262.105
📧 Email: Sales2@songwinlog.com
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