ICC A and “All Risks” — Are They Really the Same?

In international trade, many exporters and importers casually say:
“CIP requires All Risks insurance.”

Technically, that is not entirely wrong. But from an insurance and trade finance perspective, “All Risks” and ICC A are not perfectly identical terms.

This distinction becomes important when a cargo claim is rejected because of one of the many exclusions hidden in the policy wording.

Here is an interesting question from Mr. Obidur Rashid Chanchal.

Question

Dear Mr. Old Man,

As per Incoterms CIP, ICC A insurance coverage is mandatory rather than other types of coverage.

Is there any difference between “All Risks” and ICC A?

Thank you.

Obidur Rashid Chanchal

________

Answer

Dear Obidur,

Thank you for your question.

Under CIP – Carriage and Insurance Paid To – the seller is required to obtain maximum cargo insurance coverage, namely Institute Cargo Clauses A (ICC A), which is commonly referred to as “All Risks” coverage.

However, ICC A and “All Risks” are not exactly the same thing.

ICC A covers all risks of loss or damage to the cargo except those specifically excluded in the policy terms. In other words, it is “all risks subject to exclusions.”

Typical exclusions under ICC A include:

• Willful misconduct of the insured
• Ordinary leakage, ordinary loss in weight or volume, and normal wear and tear
• Inherent vice (goods deteriorating by their own nature)
• Insufficient or improper packing
• Delay
• Insolvency of shipowners or operators
• War risks
• Strikes, riots, and civil commotion (unless separately covered)

That is why many people in trade finance and shipping jokingly say:

“ICC A is not really all risks… it is all risks except the excluded risks.”

So, while ICC A provides the widest standard cargo insurance coverage available under the Institute Cargo Clauses, it still contains quite a number of exclusions hidden in the fine print.

Note:
Under CIP Incoterms® 2020, ICC A coverage is generally expected. Therefore, if an LC is silent regarding ICC A/B/C but incorporates CIP terms, presentation of ICC A insurance would normally comply.

However, if the insurance document indicates ICC B only, the situation may become disputable. Some banks may consider ICC B insufficient compared with the insurance standard implied under CIP 2020, while others may hesitate to raise a discrepancy because the LC itself did not expressly require ICC A coverage.

To avoid ambiguity, applicants should expressly state the required insurance clause in the LC.

Best regards,
Mr. Old Man