Freight Insurance for Chemical Cargo: What All Risks Coverage Actually Excludes

The Institute Cargo Clauses (A), commonly called ICC A, is the most widely adopted marine cargo insurance framework for freight worldwide. For chemical logistics providers, ICC A offers a comprehensive “All Risks” policy that covers physical loss or damage during transit. However, the term “All Risks” is a misnomer – the policy contains a number of exclusions that can expose shippers to unexpected liability.

Core Coverage Under ICC A

• Loss or damage from accidental events during loading, transit, or unloading.

• Losses arising from acts of God, such as natural disasters.

• Losses due to negligence of carriers or their agents.

These coverages apply to the cargo while it is in the carrier’s possession, provided the cargo meets the policy’s “condition of coverage” – including correct packaging, labeling, and documentation.

Key Exclusions That Matter for Chemical Shipments

1. War and Terrorism Risks

ICC A explicitly excludes loss or damage caused by war, hostilities, acts of terrorism, or any political unrest. For chemical cargo, which often travels through volatile regions, this exclusion can be significant. Shippers must purchase separate Institute War Clauses or war risk insurance to cover these perils.

2. Strikes and Industrial Action

Losses due to strikes, lockouts, or other industrial action by carriers, port authorities, or third parties are also excluded. The Institute Strikes Clauses can be added to a base ICC A policy to protect against such disruptions.

3. Inherent Vice of the Cargo

“Inherent vice” refers to a quality of the cargo that predisposes it to damage or degradation, such as chemical reactivity or volatility. ICC A does not cover Calculator or inherent vice. Shippers typically rely on a separate chemical cargo insurance that specifically addresses the unique risks of hazardous materials.

4. Packaging, Handling, and Labeling Failures

While ICC A covers loss or damage during transit, it excludes loss due to improper packaging, labeling, or handling prior to loading. A common mistake is assuming that a standard ICC A policy will cover leakage or spillage from a poorly sealed container. Verify that the cargo meets the policy’s packaging standards or consider a dedicated chemical packaging insurance rider.

5. Losses Outside the Carrier’s Control

ICC A excludes losses that occur when the cargo is not in the carrier’s possession, such as during storage at a port, or during a temporary transfer to a third‑party terminal. Shippers often use CIF or CIP terms to shift some of these responsibilities, but insurance for port storage is still required.

Additional Insurance Layers for Full Protection

1. Institute War Clauses – Covers wartime disruptions, acts of terrorism, and civil unrest.

2. Institute Strikes Clauses – Protects against strikes and industrial action.

3. Chemical Cargo Insurance (ICC A add‑on) – Addresses inherent vice and chemical‑specific risks.

4. Port Storage Insurance – Covers loss while cargo is stored in port warehouses.

5. Extended Liabilities (e.g., environmental liability) – Provides coverage for accidental releases or spills that may impact the environment.

Practical Steps for Shippers

• Review the condition of coverage in the ICC alkaline policy to ensure your packaging meets the required standards.

• Consult a broker experienced in chemical logistics to assess the need for war and strike riders.

• Purchase a dedicated chemical cargo insurance policy if the cargo exhibits high inherent vice.

• Ensure that the policy’s exclusions are clearly understood – a mistake in interpreting the policy can lead to a costly claim denial.

The “All Risks” label under Institute Cargo Clauses (A) can be misleading for chemical shippers. While ICC A provides robust protection for most accidental losses during transit, it deliberately excludes war, strikes, inherent vice, and packaging failures. By layering additional coverages – war risk, strike rider, chemical cargo add‑on, and port storage – shippers can achieve comprehensive risk management for their chemical cargo.