Cargo Insurance and Marine Trade Practices
This domain tests cargo cover and the trade practices that determine whether a loss is insured, who bears risk and what documents prove the claim. Expect questions on Institute Cargo Clauses A, B and C, transit, packing, notice, subrogation and Incoterms.
Core rules
- ICC A covers all risks of loss or damage except exclusions; ICC B and C cover listed perils, with C narrower than B. War and strikes are separate covers.
- The transit clause usually runs from warehouse to warehouse, but cover ends on delivery, on expiration of the stipulated period, or when the cargo is put to a different use.
- Standard exclusions include insufficient packing, inherent vice, delay, ordinary leakage, wear and tear, insolvency and wilful misconduct.
- The assured must take reasonable steps to avert or minimise loss and preserve recovery rights. Notice and survey at destination matter.
- Incoterms allocate risk and insurance duties: CIF and CFR risk passes at shipment; FOB risk passes when goods are on board. The cargo interest at risk insures.
Worked example
Goods are sold CIF, so the buyer bears risk from shipment and insures them. On arrival, seawater damage is found. The survey shows hatch covers were secured but a storm drove water through a damaged ventilator. Under ICC A, the seawater damage is covered; the insurer pays and takes subrogation rights against the carrier if the carrier was liable. If the damage were caused by inadequate packing, the packing exclusion would defeat the claim.
Traps
Do not assume ICC A covers war, strikes or delay. Do not confuse the sale contract's risk point with the insurance period. Do not ignore packing and inherent vice. Do not accept a clean bill of lading as proof of cargo condition on discharge. Do not overlook general average and salvage contributions.