Marine Cargo on CIF Terms Insured at the Minimum ICC(C)
Kaveri Exports Pvt Ltd ships 400 cartons of cotton yarn from Chennai to Hamburg on CIF terms. As required by the sales contract, it arranges marine cargo cover; the broker, following the minimum cover that CIF requires, places ICC(C). The vessel meets heavy weather in the Bay of Biscay. Seawater enters the hold through a hatch cover that had been left improperly secured, and 60 cartons are water-damaged. The container is discharged at Hamburg and, because the buyer delays collecting it, sits uncovered on the quay for 25 days; rain damages a further 20 cartons. The policy is warehouse-to-warehouse with the standard 60-day termination after discharge. The buyer's surveyor says the hatch cover was 'not properly closed', and the carrier denies liability. The insured asks whether all 80 cartons can be claimed under the policy.
1. Analyse whether the 60 water-damaged cartons are recoverable under ICC(C).
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The starting point is that ICC(C) is a named-perils cover, not an all-risks cover. It responds to fire or explosion, stranding, grounding, sinking or capsizing, overturning or derailment, collision or contact with an external object, discharge at a port of distress, general average sacrifice, jettison or washing overboard, and earthquake, volcanic eruption or lightning.
Entry of sea, lake or river water into the vessel, hold or container is a peril added by ICC(B). It is not in ICC(C). So the mere fact that seawater entered the hold does not engage the policy. The question becomes whether an ICC(C) peril caused the entry. Heavy weather alone is not a C peril unless the vessel stranded, grounded, sank or capsized, or was in collision.
There is no stranding or sinking reported. The proximate cause is an unsecured hatch - negligent navigation or management of the vessel, not a named peril. Negligence of the carrier is not excluded by the Institute Cargo Clauses, but it must still operate through a covered peril before the policy responds.
Conclusion: the 60 cartons are not recoverable under ICC(C). Recovery would lie against the carrier, subject to package limitation, rather than the cargo insurer.
2. Analyse the 20 cartons damaged by rain on the quay.
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Three separate obstacles arise, and the insurer should rely on all of them.
Peril: rainwater on the quay is not a named ICC(C) peril - there is no stranding, collision or other listed event. It fails at the first hurdle, just as the hatch damage does.
Delay: the loss arose because the buyer left the container uncovered for 25 days. Delay is expressly excluded, and the exclusion operates even where the delay is itself caused by an insured peril. Rain falling on goods left out by the consignee is the classic delay-type loss.
Transit status: the warehouse-to-warehouse cover continues for 60 days after discharge, so at day 25 the policy has not terminated - the insured may try to argue this point, and it must be met head-on with the peril and delay arguments rather than with an incorrect claim that cover had already ended.
Conclusion: the 20 cartons are not recoverable. The correct target is the buyer, who failed to take delivery and store the goods properly, and possibly the port operator.
3. Who should be pursuing these claims, and what should Kaveri Exports have done differently?
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Under CIF the risk passes to the buyer on shipment. Kaveri Exports buys the cover for the buyer's benefit and must tender the policy, assigned, with the shipping documents. The substantive claimant is therefore the buyer, and the seller's exposure is documentary - a failure to tender valid assigned cover is a breach of the sale contract.
Two practical consequences follow. First, Kaveri Exports should confirm that the insurance certificate was properly assigned and that the buyer has been told to notify the claim; leaving the buyer to discover the gap late invites a contractual claim back against the seller.
Second, on the commercial side the contract called for the CIF minimum, ICC(C), and the broker complied. If the buyer wanted water-damage cover it should have contracted for ICC(A) or ICC(B) and paid for it. That is a negotiation point, not a coverage point.
Going forward, the seller should state the cover level expressly in the sale contract, keep warehouse-to-warehouse evidence, and tell buyers that ICC(C) does not respond to seawater entry - a point that surprises consignees after every heavy-weather casualty.