Cargo Insurance General Conditions Official text · KKSRSB · PDF View

Marine cargo insurance covers goods against physical loss or damage while being transported between locations, whether by sea, air or associated land transit, subject to the terms and conditions of the policy.

Cover can be arranged for imports, exports and other commercial shipments, with the level of protection selected according to the nature of the goods, route, method of transport and insured value.

Sea, air & associated transit
Institute Cargo Clauses A, B & C
Single shipment or annual cover
Import & export cargo

What is marine cargo insurance?

Marine cargo insurance covers goods whilst they are in transit from one location to another.

Despite the name, marine cargo insurance is not limited to goods carried by sea. Depending on the policy, cover can also apply to goods carried by air and to associated land transport forming part of the insured journey.

Policies may be arranged for businesses including:

Importers
Exporters
Manufacturers
Traders
Freight forwarders
Logistics operators

The scope of cover depends on the cargo, route, method of transport and the Institute Cargo Clause selected.

Institute Cargo Clauses

Marine cargo insurance is commonly arranged using internationally recognised Institute Cargo Clauses.

The three principal forms are:

Institute Cargo Clauses (A)
Institute Cargo Clauses (B)
Institute Cargo Clauses (C)

Each provides a different level of cover.

Institute Cargo Clauses (A)

Institute Cargo Clauses (A) provide the broadest form of standard cargo cover.

They cover accidental physical loss of or damage to the insured goods from a wide range of causes, except where a risk is specifically excluded by the policy.

This form of cover may be appropriate where broader protection is required during transit.

The actual cover remains subject to the exclusions, conditions and geographical limits stated in the policy.

Institute Cargo Clauses (B)

Institute Cargo Clauses (B) provide cover against a specified range of risks.

These can include:

Fire or explosion
Vessel grounding, stranding, sinking or capsizing
Overturning or derailment of a land conveyance
Collision or contact with an external object
Discharge of cargo at a port of distress
Earthquake or volcanic eruption
Washing overboard
Entry of sea, lake or river water into the vessel or place of storage
Total loss of a package during loading or unloading
General average sacrifice

Cover applies in accordance with the wording and conditions of the selected clause.

Institute Cargo Clauses (C)

Institute Cargo Clauses (C) provide more limited cover against specified major transit risks.

These can include:

Fire or explosion
Vessel grounding, stranding, sinking or capsizing
Overturning or derailment of a land conveyance
Collision or contact with an external object
Discharge of cargo at a port of distress
General average sacrifice
Jettison

Clause C is therefore narrower than Clauses A and B.

Marine cargo insurance for sea freight

Goods transported by sea can be insured according to the nature of the shipment and the level of protection required.

The assessment can take into account:

Type of cargo
Packing
Vessel and method of shipment
Port of departure
Port of destination
Transit route
Cargo value
Containerised or non-containerised shipment
Previous loss history where relevant

The selected Institute Cargo Clause determines the basic scope of cover.

Air cargo insurance

Goods carried by air may be insured under the applicable Institute Cargo Clauses (Air).

Cover is designed for physical loss of or damage to cargo during the insured air transit, subject to the exclusions and conditions of the policy.

The insured journey may also include associated land transport where this forms part of the agreed transit.

Imports into North Cyprus

Goods imported into North Cyprus can pass through several stages before reaching their final destination.

A shipment may involve:

supplier → road transport → export terminal → sea or air transit → arrival port or airport → local transport → final destination

The cargo can therefore be exposed to different risks at different points in the journey.

Marine cargo insurance is arranged around the insured transit, rather than simply the time the goods spend on board a vessel or aircraft.

Exports from North Cyprus

Marine cargo insurance can also be arranged for goods exported from North Cyprus.

The policy may follow the goods from the agreed point of departure through the insured journey to the destination specified in the policy.

The route, destination, cargo type and contractual responsibility for the goods are important when determining the appropriate cover.

Single shipment cover

Marine cargo insurance can be arranged for an individual shipment.

This may be suitable where goods are imported or exported occasionally rather than on a continuous basis.

The policy is arranged around a specified consignment, including its:

Description
Value
Route
Method of transport
Origin
Destination

Annual marine cargo cover

Businesses with regular import or export activity may require cover across multiple shipments during the year.

An annual arrangement can be structured according to the expected nature, values and frequency of shipments.

The exact declaration requirements and limits are determined by the policy structure.

How is the insured value determined?

The insured value of cargo should reflect the value agreed for the purposes of the policy.

Depending on the transaction and policy structure, this can take into account matters such as:

Invoice value
Freight costs
Other agreed costs associated with the shipment
The basis of valuation specified in the policy

The insured value should be established before the transit begins.

What affects the cost of marine cargo insurance?

The premium depends on the characteristics of the shipment rather than cargo value alone.

Factors can include:

Nature of the goods
Insured value
Packing
Route
Country of origin
Destination
Method of transport
Sea, air or associated land transit
Institute Cargo Clause selected
Frequency of shipments
Claims history
Any particular features of the cargo

A shipment of machinery, for example, presents a different transit risk from packaged consumer goods or fragile merchandise.

General average

Marine transport can involve the principle of general average.

In certain circumstances, extraordinary expenditure or sacrifice may be made deliberately to preserve the vessel and cargo from a common danger.

Where applicable under the selected cover, marine cargo insurance can respond to an insured cargo owner’s contribution to general average.

This is one reason marine cargo insurance extends beyond simply paying for physical damage to the insured goods.

Important conditions and exclusions

Marine cargo insurance does not provide unrestricted cover for every form of loss.

Depending on the applicable Institute Cargo Clauses and policy conditions, matters requiring particular consideration can include:

Inadequate or unsuitable packing
Ordinary leakage or normal loss in weight or volume
Ordinary wear and tear
Delay
Inherent characteristics of the goods
Wilful misconduct
Certain war risks
Certain strike, riot or civil commotion risks
Uninsured or excluded stages of transit

Additional cover may be available for certain risks where specifically agreed.

The actual scope of cover is always determined by the clause and conditions stated in the policy.

Frequently asked questions

Is marine cargo insurance only for goods transported by sea?

No. Marine cargo insurance can also cover goods transported by air and associated land transit, depending on the insured journey and policy terms.

What is the difference between Institute Cargo Clauses A, B and C?

Clause A provides the broadest standard form of cover, subject to exclusions.

Clause B covers a specified intermediate range of risks.

Clause C provides more restricted cover against specified major transit risks.

Can one shipment be insured?

Yes. Cover can be arranged for an individual consignment.

Can regular imports and exports be insured?

Yes. Businesses with recurring shipments can also use an annual cargo arrangement where appropriate.

Can air freight be insured?

Yes. Air cargo can be covered under the applicable Institute Cargo Clauses for air transit.

Does cargo insurance end when the ship arrives?

Not necessarily. The insured transit is determined by the policy and can include agreed stages before and after the main sea or air journey.