Excluded Losses under Cargo Marine Insurance

Excluded losses under marine cargo insurance are losses, damage or expenses arising in international transit that are not recoverable under the insurance policy, incorporated clauses, endorsements or other contractual terms.

However, it is not accurate to describe every reason for non-payment as an “exclusion.” In practice, at least the following issues should be distinguished.

• losses that never fall within the insured risks in the first place;
• losses excluded under ICC Clauses 4 to 7;
• losses occurring outside the insured period or outside the insured subject matter;
• cases where insurable interest or entitlement to claim cannot be established;
• problems involving disclosure, Warranty, special conditions or other contractual requirements;
• cases involving no physical cargo damage but only delay, contractual penalties or loss of market value; and
• cases where the cause, period of occurrence or quantum cannot be sufficiently proved.

For example, where a theft loss is not paid under ICC(B) or ICC(C), theft is not necessarily subject to an express exclusion. Because ICC(B) and ICC(C) operate on a listed-perils basis, theft may simply fall outside the insured risks unless additional cover has been arranged.

This article distinguishes exclusions, losses outside the insured risks, duration issues, disclosure and contractual requirements, and evidential failure by reference to ICC(2009) Clauses 4, 5, 6 and 7, MIA 1906 Section 55 and relevant principles of the Insurance Act 2015.

Scope of This Article

Item	What This Article Covers	What Other Articles Cover
ICC exclusions	The structure and practical operation of Clauses 4, 5, 6 and 7	ICC 2009 articles examine the full wording
Insured risks versus exclusions	The distinction between a loss outside the insured risks and a loss excluded after entering the coverage grant	Marine Cargo Insurance Risks examines insured perils in detail
ICC(A), ICC(B) and ICC(C)	Why the reason for non-payment differs by condition	The individual ICC(A), ICC(B) and ICC(C) articles examine their respective coverage structures
All Risks terminology	Why ICC(A) still requires review of exclusions, duration and contractual terms	Misunderstanding of All Risks Coverage focuses on customer communication and expectation management
Insufficient packing	The application requirements of ICC Clause 4.3 and relevant rebuttal evidence	Specialist packing articles examine design and packing responsibility
Inherent vice	The relationship between ICC Clause 4.4 and MIA 1906 Section 55	Commodity-specific deterioration and temperature losses are addressed separately
Ordinary wear and ordinary leakage	The distinction between normal change and abnormal loss caused by an external event	Specialist articles examine shortage, leakage and weight differences
Delay loss	The distinction between ICC Clause 4.5 and physical cargo damage	Delay Damage examines delay and logistics-related economic loss in detail
War and strikes-related risks	Exclusion under the standard ICC and possible reinstatement by separate clauses	Institute War Clauses and Institute Strikes Clauses are examined separately
Loss outside the insurance period	Why this is a duration issue rather than an exclusion	Insurance Period examines duration in detail
Insurable interest	Why entitlement to claim is separate from an exclusion	Insurable Interest examines the issue in detail
Disclosure differences	Fair Presentation, Warranty and other contractual requirements	Marine cargo insurance and disclosure articles examine those rules in detail
Fraudulent claims	The distinction between wilful loss, pre-contract disclosure and post-loss fraudulent claims	Claims and insurance-contract-law articles examine those issues in detail
Cause and proximate cause	Basic analysis where insured and excluded causes compete	Insured Risks and Proximate Cause examine causation in detail
Carrier liability	Why a cargo-policy exclusion and carrier liability are separate questions	Carrier Liability and Subrogation examine recovery against third parties

Why Exclusions and Non-Covered Losses Must Be Distinguished

Marine cargo insurance analysis normally begins by determining whether the loss falls within the insurance grant. Exclusions, duration, insurable interest, contractual conditions and proof are then considered separately.

Even where the final result is non-payment, the reason matters because it determines the proper response, additional evidence, potential recovery target and future insurance design.

Category	Basic Meaning	Typical Example	Main Issue to Review	Practical Response
Outside insured risks	The risk was never included in the coverage grant	Theft or rain damage under ICC(C) without additional cover	Risks Clause and endorsements	Determine whether the peril was insured rather than arguing an exclusion
General exclusion	The loss enters the coverage analysis but is excluded under Clause 4	Insufficient packing, inherent vice or delay	Cause, requirements, exceptions and causation	Test whether the exclusion requirements are actually satisfied
Unseaworthiness or unfitness exclusion	Unfitness of the vessel, container or conveyance and the Assured's knowledge become relevant	Using a known unfit container	Clause 5, knowledge and timing of loading	Identify who knew what and when
War or strikes exclusion	Risks are excluded under ordinary ICC and may be covered under separate clauses	War, riot, terrorism or politically motivated destruction	Clauses 6 and 7 and any War or Strikes cover	Identify the cause and applicable additional clauses
Outside duration	The casualty occurred outside the insured period	Loss before commencement or after termination	Transit Clause and time of occurrence	Distinguish the date of discovery from the date of occurrence
Outside the insured subject matter	The property or interest is not within the policy description	Undeclared cargo or another uninsured interest	Policy, schedule and declaration	Match the actual cargo and interest against the contract
Contractual condition issue	Disclosure, Warranty or endorsement terms may be relevant	Temperature conditions, route conditions or material differences in cargo	Fair Presentation, Warranty and endorsements	Analyse the breach and its contractual significance
Failure of proof	The cause, period or amount cannot be established	No photographs and no reliable evidence of when damage occurred	Survey, handover records and photographs	Supplement the evidence and avoid speculative claims
Economic loss	The claim does not concern physical cargo loss	Penalty, business interruption or lost sales	Existence of physical loss and delay exclusions	Separate cargo damage from commercial loss

Exclusion Structure under ICC(2009)

Clause	Main Exclusion	Practical Meaning	Main Qualification	Evidence
Clause 4.1	Wilful misconduct of the Assured	Intentional loss caused by the Assured is excluded	Distinguish wilful conduct from negligence or poor judgment	Incident history, instructions and witness evidence
Clause 4.2	Ordinary leakage, ordinary loss in weight or volume and ordinary wear and tear	Normal unavoidable change is distinguished from accidental loss	Abnormal leakage caused by damage to the container or packaging requires separate analysis	Weight records, container condition and historical experience
Clause 4.3	Insufficiency or unsuitability of packing or preparation	Packing unable to withstand the ordinary incidents of the insured transit may be excluded	Packer, timing and abnormal external events must be considered	Packing specifications, photographs and shock records
Clause 4.4	Inherent vice or nature of the cargo	Loss generated by the cargo's own characteristics is excluded	A material external accident may require a different causation analysis	Quality evidence, temperature and production or shipment records
Clause 4.5	Loss caused by delay	Delay loss is generally excluded even if the delay follows an insured peril	Certain Clause 2 expenses are dealt with separately	Transit schedule, cause and cargo condition
Clause 4.6	Insolvency or financial default of vessel interests	The Assured's knowledge that the default could prevent the voyage is relevant	There are qualifications for certain good-faith assignees	Carrier information, knowledge at loading and sales contract
Clause 4.7 under ICC(A)	Weapons or devices employing atomic or nuclear fission, fusion or similar force	Nuclear-weapon-related loss is excluded	Additional radioactive, chemical or biological exclusions may also apply	Policy, additional exclusions and cause
Clause 4.7 under ICC(B) and ICC(C)	Deliberate damage or destruction by the wrongful act of any person	Malicious damage is excluded from the listed-perils forms	Review any Malicious Damage Clause or other additional cover	Incident report, police material and endorsements
Clause 4.8 under ICC(B) and ICC(C)	Nuclear-weapon-related loss	Equivalent in substance to the ICC(A) Clause 4.7 nuclear exclusion	Review the policy as a whole, including additional exclusions	Policy and cause
Clause 5	Unseaworthiness and unfitness of vessel, container or conveyance	Knowledge, identity of the loading party and timing of loading are material	Good-faith assignees and Clause 5.3 should be considered	Container inspection, loading records and knowledge evidence
Clause 6	War, civil war, capture, detention and derelict weapons of war	Excluded from ordinary ICC and considered under Institute War Clauses	Under ICC(A), piracy is excepted from the relevant war exclusion wording	War cover, location and cause
Clause 7	Strikes, riots, civil commotion, terrorism and politically motivated acts	Excluded from ordinary ICC and considered under Institute Strikes Clauses	Identity and motive of the actor can be material	Strikes cover, police and port reports

Relationship with MIA 1906 Section 55

MIA 1906 Section 55 addresses Included and Excluded Losses under English marine insurance law. In an actual claim, however, the wording incorporated into the insurance policy, including the ICC and special endorsements, should be reviewed first.

Authority	Rule	Connection with ICC	Practical Caution
MIA 1906 Section 55(1)	Basic principle of insurer liability for loss proximately caused by an insured peril	Applied together with the insured risks and exclusions in the ICC	Do not treat the cause occurring last in time as automatically being the proximate cause
Section 55(2)(a)	Excludes loss attributable to wilful misconduct of the Assured	Connects with ICC Clause 4.1	Distinguish wilful conduct from negligence
Section 55(2)(b)	Generally excludes loss caused by delay	Connects with ICC Clause 4.5	Delay loss remains a separate issue even where an insured peril caused the delay
Section 55(2)(c)	Generally excludes ordinary wear and tear, ordinary leakage or breakage and inherent vice	Connects with ICC Clauses 4.2 and 4.4	Distinguish abnormal external events
Insufficient packing	Section 55(2)(c) does not independently set out the ICC packing exclusion	Review ICC Clause 4.3 directly	Do not confuse the source of the packing exclusion

Caution on the Application of the Insurance Act 2015

Whether the Insurance Act 2015 applies directly depends on the actual insurance policy, governing law, contractual structure and applicable legal system.

References in this article to Fair Presentation, Warranty and Fraudulent Claim under the Insurance Act 2015 are intended to explain the legal framework relevant to policies governed by English law.

The remedies or effects of the Insurance Act 2015 should not be applied mechanically to a policy governed by Japanese law or another foreign law. Where English law is not the governing law, the actual policy wording, governing-law clause and applicable local law must be reviewed.

Distinguishing Disclosure Differences, Warranty and Fraudulent Claims

A difference in disclosure or the existence of inaccurate information should not automatically be treated as wilful misconduct of the Assured. Pre-contract disclosure, conduct during the insurance period and post-loss claims involve different legal and contractual rules.

Stage	Main Issue	Main Authority	Potential Insurance Effect	Points to Confirm
Before contract formation	Failure to disclose a material circumstance or inaccurate presentation	Insurance Act 2015 Section 3, Section 8 and Schedule 1	Remedies differ according to deliberateness, recklessness and the underwriting decision that would otherwise have been made	Cargo, packing, route, temperature, used goods and dangerous goods
During the insurance period	Breach of Warranty or special condition	Insurance Act 2015 Sections 10 and 11 and the policy	Suspension of liability or relevance of the breach to the actual loss may arise	Period of breach, remedy, casualty timing and contract variation
Change of route or cargo	Notice obligations, Change of Voyage or variation of contract	ICC and individual endorsement	Additional premium, changed terms or termination of cover may arise	Timing, notification, approval and additional premium
At the casualty stage	Intentional causation of the loss by the Assured	ICC Clause 4.1 and MIA Section 55(2)(a)	The intentionally caused loss may be excluded	Intent, actor, instructions and causation
At the claim stage	Fraudulent or false insurance claim	Insurance Act 2015 Section 12, policy and governing law	Non-payment, recovery of sums already paid or termination may arise	Claim amount, forged documents, false element and intent

Why a Loss May Not Be Recoverable under ICC(A), ICC(B) or ICC(C)

Loss or Risk	ICC(A)	ICC(B)	ICC(C)	Practical Caution
Accidental breakage during ordinary handling	May be covered if no exclusion applies	Must fall within a listed peril	Must fall within a listed peril	Under B and C, first ask whether the peril is insured at all
Theft, pilferage or non-delivery	May be covered if no exclusion applies	Additional cover is usually checked	Additional cover is usually checked	Review TPND or equivalent additional cover
Rain or fresh-water damage	May be covered if no exclusion applies	Review the listed water-entry wording or additional cover	Additional cover is usually required	Identify water type, place of entry and external damage
Malicious damage by a third party	Review War and Strikes exclusions and other applicable terms	Review Clause 4.7 and additional cover	Review Clause 4.7 and additional cover	Identify actor, motive and any Malicious Damage Clause
Piracy	Consider cover taking account of the piracy exception in the War Exclusion	Not automatically covered	Not automatically covered	Do not decide merely from the condition label
Insufficient packing	Review Clause 4.3	Review Clause 4.3	Review Clause 4.3	Apply the actual exclusion requirements
Inherent vice	Review Clause 4.4	Review Clause 4.4	Review Clause 4.4	Analyse any competing external cause
Delay loss	Review Clause 4.5	Review Clause 4.5	Review Clause 4.5	Delay loss may remain excluded even where the delay followed an insured peril
War risks	Excluded under Clause 6	Excluded under Clause 6	Excluded under Clause 6	Review Institute War Clauses
Strikes, riots and terrorism	Excluded under Clause 7	Excluded under Clause 7	Excluded under Clause 7	Review Institute Strikes Clauses

Main Situations in Which This Analysis Applies

Situation	Main Exclusion or Non-Coverage Issue	First Evidence to Review	Practical Caution
Cargo is physically damaged during transit	Insured peril, insufficient packing or pre-existing damage	Casualty photographs, packing photographs and survey evidence	Do not decide from the physical result alone
Rust, mould or deterioration occurs	Inherent vice, ordinary deterioration or external wetting	Pre-shipment condition, humidity and moisture evidence	Separate the time of discovery from the cause
Shortage or leakage occurs	Ordinary shortage, container damage or theft	Weight records, seals and container photographs	Determine whether the loss exceeds normal tolerance
Frozen or chilled cargo deteriorates	Inherent vice, delay or temperature endorsement	Temperature logs, machinery records and quality inspection	Distinguish physical damage from mere non-compliance with a specification
Arrival is delayed	Delay exclusion and economic loss	Transit schedule, cause and cargo condition	Determine whether there is physical cargo damage
Riot, terrorism or politically motivated destruction is suspected	Clause 7 and Strikes cover	Police report, public information and policy	Do not classify the loss solely from the outward appearance of fire or damage
Time of casualty is unknown	Outside duration and failure of proof	Handover records, unpacking records and photographs	Separate discovery date from occurrence date
Declared cargo differs from the actual cargo	Fair Presentation, Warranty and insured subject matter	Placement request, Invoice, SDS and B/L	Assess materiality and relationship with the loss
A carrier relies on a contractual defence	Confusion between cargo-policy exclusions and carrier liability	B/L, handover records and casualty report	Carrier liability may remain even if the insurance claim fails

Situations Where the General Rules in This Article Cannot Be Applied Mechanically

Situation	Why the General Rule May Not Apply	Priority Document	Practical Response
ICC(1982) or earlier wording	Clause numbering and wording differ	Version incorporated into the policy	Do not mechanically apply ICC(2009)
Insurer-specific domestic wording	Standard ICC may be modified or replaced	General conditions, special clauses and endorsements	Identify deviations from standard ICC
Domestic transit insurance	Ocean cargo ICC may not apply	Domestic transit wording	Apply the relevant domestic exclusions
Stock Throughput or similar property programme	Transit and storage may be insured together	Stock Throughput Policy	Identify the boundary between Transit and Storage
Frozen or refrigerated cargo wording	Additional temperature and time requirements may apply	Frozen Food Clauses and temperature endorsements	Do not rely on standard ICC alone
Used goods, machinery or exhibition goods	Pre-existing rust, scratches or damage may be specially restricted	Used Goods terms, Replacement Clause and survey requirements	Review pre-shipment inspection and endorsements
War or Strikes cover is attached	A peril excluded under the main ICC may be reinstated under separate wording	Institute War Clauses and Institute Strikes Clauses	Do not conclude non-payment from the main ICC alone
Additional cyber, sanctions or radioactive exclusions	Exclusions beyond the standard ICC may apply	Additional exclusion and Sanctions Clause	Review the full policy documentation
Governing law is not English law	MIA 1906 and Insurance Act 2015 may not apply directly	Governing-law clause and local law	Obtain appropriate local legal advice

Decision Points for Major Exclusions

Exclusion or Non-Coverage Issue	Typical Insurer Position	Possible Evidence for the Assured	Important Evidence	Practical Caution
Insufficient packing	Packing unable to withstand ordinary transit caused the loss	An abnormal fall, impact or collision was the more significant cause	Packing design, shock records and casualty photographs	Imperfect packing does not automatically establish the exclusion
Inherent vice	Rust, deterioration or self-heating arose from the cargo itself	External wetting or equipment failure caused the damage	Quality records, temperature logs and inspection reports	Analyse the cause rather than the physical result
Ordinary shortage or leakage	The loss falls within normal tolerance	Container damage or abnormal leakage occurred	Weight certificates, container photographs and historical data	Review differences in measurement method
Delay	The loss resulted from passage of time or late arrival	A separate insured casualty occurred during the delay	Schedule, casualty records and damage photographs	Delay loss may be excluded even if an insured event caused the delay
Unseaworthiness or unfitness	The Assured knowingly used an unfit vessel or container	The Assured lacked knowledge and did not perform the loading	Inspection records, emails and loading records	A defective container alone does not automatically satisfy Clause 5
War or strikes-related loss	The cause falls within Clause 6 or 7	Separate cover applies or an ordinary insured peril is the proximate cause	Policy, police and port reports	Do not classify the claim merely because the physical result is fire or breakage
Outside duration	The casualty occurred before attachment or after termination	Evidence shows that the cause arose within the insured period	Handover records, temperature or shock logs	Do not decide only from the discovery date
Disclosure difference	The insurer would have declined or changed the underwriting terms	The difference was immaterial or would not have changed underwriting	Placement documents, underwriting record and actual cargo details	Review governing law and contractual remedies
Fraudulent claim	The claim amount or evidence was intentionally false	The problem was a clerical error, calculation mistake or genuine difference of opinion	Source documents, claim history and correction records	Do not infer dishonesty merely from an error

How to Analyse Insufficient Packing

ICC(2009) Clause 4.3 excludes loss caused by packing or preparation of the insured cargo that is insufficient or unsuitable to withstand the ordinary incidents of the insured transit.

For this purpose, packing can include stowage and securing within a container, including blocking, bracing and lashing.

The following matters should be examined before concluding that the exclusion applies:

• who performed the packing or preparation;
• whether packing occurred before or after attachment of the insurance;
• whether the Assured or its employees performed the packing;
• whether the packing was actually insufficient for the ordinary transit;
• whether an abnormal fall, collision, overturning or impact occurred; and
• whether insufficient packing or the external accident was the more significant cause of the damage.

Where there are substantial impact marks or evidence that the container fell or overturned, imperfect packing alone may not determine the claim. By contrast, where no external casualty is found and cargo moved under ordinary vibration, securing method and weight distribution become particularly important.

How to Analyse Inherent Vice and Ordinary Wear

Inherent vice concerns loss arising from the physical, chemical or biological characteristics of cargo itself, such that deterioration may occur without an external fortuitous event.

Decay, fermentation, self-heating, spontaneous combustion, evaporation, natural drying, rust, mould, infestation and quality deterioration are examples in which inherent characteristics may become relevant. Their presence, however, does not automatically establish the exclusion.

For rust, for example, possible causes include:

• rust existing before shipment;
• ordinary humidity changes or condensation;
• insufficient anti-rust treatment;
• entry of sea water or rain water; and
• container damage or warehouse leakage.

Where an external event activates or accelerates an inherent characteristic, proximate cause, the actual exclusion wording and the interaction of multiple causes require individual analysis.

Distinguishing Delay Loss from Physical Cargo Damage

ICC(2009) Clause 4.5 generally excludes loss, damage or expense caused by delay even where the delay itself results from an insured peril.

Typical delay-related losses include:

• contractual penalties for late delivery;
• market-value reduction after missing the selling season;
• production or business interruption;
• cost of purchasing substitute goods;
• lost sales opportunities; and
• consequential claims from trading partners.

If a separate insured casualty such as fire, refrigeration failure or wet damage occurs during a period of delay and physically damages the cargo, that physical loss should be considered separately.

Where deterioration arises simply because time passed, both the delay exclusion and inherent vice may require consideration.

How to Analyse Temperature Change and Quality Deterioration

Temperature deviation or failure to meet a quality specification is a result, not a cause.

Item	What to Confirm	Facts Supporting an Exclusion	Facts Supporting Cover
Pre-shipment temperature	Whether the cargo was properly pre-cooled	Temperature was already high at loading	Temperature was compliant at loading
Equipment condition	Whether reefer machinery, generator or power supply failed	Equipment operated normally	Shutdown, failure or power interruption is recorded
Set point	Who selected the temperature and at what level	Incorrect shipper instruction	Carrier or warehouse setting error
Duration of abnormality	Whether any time requirement in the endorsement was satisfied	Deviation was too brief to affect quality	Deviation exceeded the contractual threshold
Condition of the cargo	Pre-shipment quality, expiry and production date	Deterioration pre-dated shipment	Cargo was sound at shipment
Delay	Whether deterioration resulted only from passage of time	Only extended transit or storage occurred	A separate insured event caused a temperature abnormality

Where an Insured Cause and an Excluded Cause Compete

Actual cargo losses may involve both an insured cause and an excluded cause.

Examples include a dropped container together with insufficient packing, sea-water entry together with inadequate anti-rust protection, reefer failure together with inherent deterioration, or fire together with delay.

Loss	Possible Insured Cause	Possible Excluded Cause	Main Evidence	Practical Caution
Machinery breakage	Dropping, collision or overturning	Insufficient packing or securing	CCTV, shock recorder and packing design	Compare ordinary transit requirements with the severity of the external event
Rust	Sea-water or rain-water entry	Inherent characteristics or poor anti-rust protection	Salt testing, external damage and pre-shipment photographs	Identify water type and time of entry
Food deterioration	Power interruption or reefer failure	Delay, inherent vice or inadequate pre-cooling	Temperature logs, machinery data and quality inspection	Identify the stage at which the temperature abnormality occurred
Cargo shortage	Theft, container damage or leakage	Ordinary shortage or measurement difference	Seal, weight certificates and container photographs	Use comparable measurement methods at origin and destination
Mould	Warehouse leakage or rain wetting	Humidity, packing or inherent characteristics	Humidity data, leakage marks and packing information	Identify time of development and moisture source
Fire damage	Ordinary accidental fire	Riot, terrorism or politically motivated destruction	Police and fire reports, actor and motive	Do not apply ordinary ICC merely from the physical appearance of fire

Where both insured and excluded causes are materially involved, the result depends on the wording, governing law and applicable case law. The loss should not be divided mechanically, nor should the cause occurring last in time automatically control.

Decision Flow for Exclusions and Non-Covered Losses

1. Confirm the insurance policy, certificate, applicable ICC and wording version.
2. Check additional War, Strikes, temperature, theft, malicious-damage and other cover.
3. Identify the insured cargo, value, transit and Assured.
4. Determine whether the casualty may have occurred during the insured period.
5. Investigate the actual cause rather than relying only on the outward form of the damage.
6. Determine whether the contract uses broad ICC(A) cover or listed-perils ICC(B) or ICC(C).
7. Determine whether the cause enters the insured risks.
8. Review the Clause 4 general exclusions.
9. Review Clause 5 unseaworthiness or unfitness.
10. Review Clauses 6 and 7 for War and Strikes-related exclusions.
11. Determine whether insured and excluded causes compete.
12. Separate duration, insurable interest, subject matter and evidential problems.
13. Review pre-contract disclosure, Warranty, change notification and fraudulent claim separately.
14. Separate physical cargo damage from delay, penalties and other economic loss.
15. Submit evidence to the insurer and request the exclusion reason and contractual basis in writing.
16. Preserve rights against carriers, warehouses and other third parties independently of the cargo-insurance outcome.

Cases That Frequently Cause Practical Problems

Case	Main Cause or Issue	Evidence	Decision Point	Initial Action
Machinery damaged inside a wooden case	Dropping versus insufficient packing	Case, securing, shock data and CCTV	Whether an impact beyond ordinary handling occurred	Photograph the packing before dismantling it
Rust on metal products	Sea-water wetting versus inherent characteristics	Salt testing, external damage and pre-shipment photographs	Identify moisture source and transit stage	Arrange survey and sampling
Shortage of liquid cargo	Leakage versus ordinary shortage	Weight certificates and tank or container records	Whether the loss exceeds normal tolerance	Compare measurement conditions at origin and destination
Thawed frozen food	Equipment failure versus delay or insufficient pre-cooling	Temperature logs, equipment data and loading temperature	Identify the cause and applicable temperature endorsement	Secure temperature data immediately
Late arrival of seasonal goods	Market-value reduction caused by delay	Cargo condition, sales contract and schedule	Whether physical loss exists	Separate cargo loss from commercial loss
Warehouse fire during a riot	Ordinary fire versus Strikes risk	Fire and police reports and Strikes cover	Identify the actor and motive	Obtain official local records
Wet damage caused by a defective container	Clause 5 unfitness versus external casualty	EIR, container photographs and loading records	Review the Assured's knowledge and loading party	Inspect the container before return
Damage to used machinery	Pre-existing damage versus transit loss	Pre-shipment survey and repair history	Identify the difference in condition before and after transit	Obtain expert inspection before repair
Fire involving undeclared dangerous goods	Fair Presentation, insured subject matter and cause	SDS, proposal, Invoice and B/L	Assess the effect of the difference on underwriting	Separate the disclosure issue from the cause of the casualty
Damage discovered during unpacking with unknown cause	Duration, proof and pre-existing damage	Handover records, unpacking video and delivery remarks	Identify when and in whose custody the damage occurred	Arrange joint attendance where possible

Application Scenario 1 — Large Machinery Damaged from Yokohama to Rotterdam

Scenario: A Japanese exporter ships large machinery insured for JPY 130 million from Yokohama to Rotterdam in a wooden case.

On arrival, part of the wooden case is deformed and an internal shaft is bent. The insurer argues that the internal securing was insufficient for the weight and centre of gravity of the machinery and relies on ICC(2009) Clause 4.3.

The exporter argues that the container was dropped from cargo-handling equipment at the transshipment port and that the impact was outside the ordinary incidents of transit.

The freight forwarder states that no dropping report was received from the transshipment terminal, but a shock indicator inside the container records a substantial impact.

The investigation should review packing design, weight and centre of gravity, blocking and bracing, external container damage, shock-indicator data, terminal CCTV, handling records and survey findings.

Where inadequate packing and an abnormal external impact both appear significant, their causal importance must be analysed under the actual wording and governing law.

Application Scenario 2 — Deterioration of Frozen Food from Singapore to Tokyo

Scenario: A Japanese importer ships frozen food insured for JPY 95 million from Singapore to Tokyo.

Inspection after arrival shows cargo temperatures above specification and part of the cargo is declared unsaleable.

The insurer argues that inadequate pre-cooling, voyage delay and inherent deterioration caused the loss and refers to ICC Clauses 4.4 and 4.5.

The importer argues that power to the reefer container was interrupted for approximately 18 hours during the voyage and that an external accidental event caused physical deterioration.

The carrier states that the reefer machinery itself was functioning normally and that the cargo was already warm when loaded.

The analysis should review pre-loading temperature, set point, supply air and return air, power records, machinery alarms, any contractual duration threshold under the temperature endorsement, production date, shelf life and inspection results.

The conclusion should not be based solely on the arrival temperature. The chronology of the temperature abnormality and the cause of the deterioration must be established.

Application Scenario 3 — Warehouse Fire During a Riot in Hamburg

Scenario: A Japanese importer plans to ship automotive parts insured for JPY 180 million from Hamburg to Kobe.

Before loading, a fire occurs in a port warehouse and destroys most of the cargo. A major riot is occurring in the area on the same day, with reports of arson at several warehouses.

The importer argues that ICC(A) applies and that fire is a typical form of physical cargo damage.

The insurer argues that, if the fire was deliberately caused by rioters or by persons acting from a political motive, Clause 7 may apply and Institute Strikes Clauses would need to be considered.

The freight forwarder states that an accidental electrical fire in the warehouse has not been ruled out.

The investigation should review the fire report, police report, surveillance footage, point of origin, evidence of arson, motive of the actor, Strikes cover, attachment of insurance and the purpose of the warehouse storage.

The physical appearance of a fire is not enough. The actor, motive and actual cause must be established before classifying the loss.

Freight Forwarder Involvement

These Standard Five Classifications are not legal classifications established by statute or universally accepted by the industry. They are an analytical framework used in this series to organise the scope of a freight forwarder's contractual and operational involvement.

Standard Five Classifications	Typical Involvement	Connection with Exclusion Analysis	Limits to Confirm	Main Documents
1. Simple Intermediary	Connects the shipper, insurer and carrier	Transmits cargo, casualty and evidential information	Should not determine coverage or exclusions conclusively	Instructions, emails and quotations
2. Cargo Transportation Service Provider	Performs pickup, packing, storage, handling or delivery	Provides evidence concerning packing and operational circumstances	Must distinguish its operational responsibility from insurance exclusions	Work records, photographs, SOP and invoices
3. NVOCC / House B/L Issuer	Issues a House B/L and acts as Contracting Carrier	May itself be a party to the transport-liability dispute	Insurance exclusion does not automatically eliminate its carrier liability	House B/L, terms and casualty report
4. Door-to-Door Single Contractor	Contracts for the entire transport chain	Integrates evidence from multiple transport stages	Door-to-door contracting does not itself confer authority to determine insurance coverage	Main contract, subcontract and operational records
5. Agent / Coordinator for Specific Operations	Coordinates local survey, storage or handling	Collects causation evidence and local official records	Authority, reporting scope and decision-making power must be confirmed	Agency Agreement, local report and instructions

Packing, storage, inspection, stowage, vanning, devanning, drayage, lashing, temperature setting and other physical operations are facts used to identify the actual scope of engagement within the Standard Five Classifications. They do not replace the classifications and do not create a sixth category.

The classifications alone do not determine liability or authority. At least two further questions must be addressed:

• whether the freight forwarder acted as Contracting Carrier, Actual Carrier or merely as an arranger; and
• what authority or delegated scope it received concerning packing, temperature setting, cargo declaration, casualty notice, survey arrangements and insurance explanation.

A freight forwarder should not state conclusively that a claim will be excluded merely because the facts appear to involve packing, inherent vice or delay. Conversely, it should not state that payment is guaranteed merely because ICC(A) applies.

Documents to Review After a Casualty

Document	What to Confirm	Main Exclusion or Non-Coverage Issue	Caution
Policy and insurance certificate	ICC, War, Strikes, endorsements, duration and insured value	Coverage grant, additional exclusions and duration	Review the full wording, not only the certificate
Placement request and declaration	Cargo, route, temperature, dangerous goods and packing	Fair Presentation and insured subject matter	Compare with the actual cargo
Invoice and Packing List	Description, quantity, value and package unit	Subject matter, shortage and disclosure differences	Do not rely only on a generic product description
B/L and Waybill	Transit, carrier, transshipment and handover	Duration, casualty stage and carrier liability	Review both House and Master documents
Photographs and video	Outer packing, inner packing, cargo and container condition	External casualty, packing and pre-existing damage	Record continuously from before unpacking where possible
Packing specifications and work records	Securing, cushioning, waterproofing, anti-rust treatment and weight distribution	Clause 4.3	Compare design with actual packing
Temperature and equipment records	Set point, actual readings, alarms and power	Inherent vice, delay and temperature endorsements	Confirm measuring position and time
Weight and quantity records	Origin and destination weights and measuring methods	Ordinary shortage, leakage and theft	Use comparable measurement standards
Survey Report	Cause, stage of occurrence and repairability	Proximate cause, exclusion and quantum	Separate assumptions from confirmed facts
Police, fire and port records	Cause of fire, theft, riot or terrorism	Clauses 6 and 7 and malicious damage	Do not determine causation from media reporting alone
Handover and gate records	Cargo condition, remarks and timing	Duration, casualty stage and proof	Assess the significance of clean receipt in the actual context
Communications with insurer	Notification, additional evidence and exclusion reasoning	Contractual terms and reservation of rights	Confirm oral explanations in writing where possible

Common Misunderstandings

Misunderstanding	Actual Practice	Practical Caution
ICC(A) covers every loss	ICC(A) remains subject to Clauses 4 to 7 and other contractual requirements.	Review cause and the relevant exclusion wording.
Every reason for non-payment is an exclusion	A loss may be outside the coverage grant, duration, subject matter or evidence requirements.	Identify the exact reason and contractual basis.
Theft under ICC(B) is unpaid because theft is expressly excluded	Theft may simply not be a listed peril unless added by endorsement.	Review TPND or equivalent additional cover.
Rust discovered during transit is automatically an insured casualty	The place of discovery and the cause of rust are different questions.	Review moisture source, pre-shipment condition and salt evidence.
If packing is imperfect, an external casualty no longer matters	The causal relationship between packing and the external casualty must be analysed.	Compare impact, dropping evidence and packing design.
No external damage means the cause must be insufficient packing	Internal shock, vibration, temperature or other causes may exist.	Do not determine causation from external appearance alone.
If fire caused the delay, delay loss is covered	Clause 4.5 may exclude delay loss even where an insured peril caused the delay.	Separate physical loss from economic loss.
War and strikes risks are automatically included in cargo insurance	They are excluded under ordinary ICC and require review of separate clauses.	Check War and Strikes conditions on the policy.
A defective container always triggers Clause 5	Loading circumstances and the Assured's knowledge are material.	Identify who knew of the defect and when.
Any disclosure difference automatically voids the entire policy	The result depends on governing law, nature of the breach and effect on underwriting.	Analyse Fair Presentation and available remedies separately.
Any invoice error is a fraudulent claim	Intentional falsehood must be distinguished from calculation or clerical error.	Correct identified errors promptly.
If the cargo policy does not cover the loss, the carrier cannot be liable	Insurance duration and carrier liability are separate issues.	Preserve third-party time limits.
Once the insurer relies on an exclusion, further evidence is unnecessary	The exclusion requirements, cause and third-party liability may still require proof.	Request the written reason and contractual clause.
A freight forwarder can finally decide whether cargo insurance responds	The answer depends on its insurance authority and contractual role.	Separate factual assistance from the insurance determination.
An insurance exclusion ends the entire casualty process	Claims against carriers, warehouses or packing contractors may remain.	Review responsible parties and time limits independently.

Decision Checklist

Stage of Review	Party to Confirm With	What to Confirm	Action If There Is a Problem
Placement request	Shipper, insurer and insurance intermediary	Cargo, route, packing, temperature and dangerous-goods status	Refer unclear matters before placement
Selection of insurance condition	Insurer and cargo owner	ICC, War, Strikes and additional risks	Add protection for material cargo-specific exposures where appropriate
Before shipment	Shipper, packing contractor and freight forwarder	Packing, securing, waterproofing, anti-rust treatment and pre-shipment condition	Preserve photographs and work records
Discovery of loss	Cargo owner, warehouse and carrier	Damage condition, time of discovery, outer packing and delivery remarks	Preserve evidence before movement or disposal
Notice to insurer	Insurer and insurance intermediary	Policy, casualty, suspected cause and quantum	Notify promptly and obtain survey instructions
Suspected packing exclusion	Packing contractor, surveyor and manufacturer	Fitness for ordinary transit and any external impact	Compare packing design with casualty evidence
Suspected inherent vice	Manufacturer, testing laboratory and surveyor	Pre-shipment quality, natural deterioration and external casualty	Provide quality and environmental records
Temperature casualty	Carrier, warehouse and reefer operator	Setting, power, machinery, pre-cooling and abnormal duration	Secure log data immediately
Delay-loss claim	Cargo owner, sales personnel and insurer	Physical cargo damage versus penalty or lost opportunity	Separate heads of loss
Disclosure difference discovered	Insurer, legal personnel and insurance intermediary	Nature, materiality and underwriting impact of the difference	Correct the information and obtain a written response
Exclusion decision received	Insurer and insurance intermediary	Contractual clause, proximate cause and factual findings	Request written reasons and identify missing evidence
Third-party claim	Contracting Carrier, Actual Carrier, warehouse and other parties	Casualty stage, responsibility and notice or litigation limits	Issue Claim Notice without waiting for the insurance decision
Legal dispute	Insurer and maritime lawyer	Governing law, wording, causation, evidence and limitation periods	Reserve rights and obtain specialist advice

When to Involve a Maritime Lawyer

Routine casualty notification, document submission and coverage enquiries are normally handled with the insurer or insurance intermediary. Specialist maritime legal advice should be considered where:

• the dispute concerns whether the insured cause or excluded cause is the proximate cause;
• both insufficient packing and an abnormal fall or collision are alleged;
• inherent vice and an external casualty compete as causes;
• Clause 5 unseaworthiness or unfitness and the Assured's knowledge are disputed;
• classification of War, Strikes, terrorism or politically motivated activity is disputed;
• Fair Presentation, Warranty or Fraudulent Claim under the Insurance Act 2015 becomes material;
• it is unclear whether Japanese, English or another law governs;
• occurrence during the insured period must be established by circumstantial evidence;
• the insurer seeks avoidance, termination or complete denial of the claim;
• cargo-policy exclusions and liability of a freight forwarder or carrier overlap;
• cause investigation, sample preservation or overseas evidence must be secured;
• insurance, carrier-notice or litigation time limits are approaching; or
• the claim is high-value and involves multiple insurers or co-insurers.

In an exclusion dispute, the analysis should organise chronologically the cargo condition before the casualty, events during transit, insured perils, exclusion requirements and the causal relationship between competing factors.

Loss Mitigation and Preservation of Third-Party Rights

An exclusion or non-coverage position from the insurer does not end the casualty process. Reasonable steps should still be taken to prevent further deterioration and preserve rights against carriers, warehouses, packing contractors and other third parties.

This may include protecting wet cargo from further corrosion, moving refrigerated cargo into a suitable temperature-controlled environment, and separating salvageable goods from goods that may be a total loss.

At the same time, repair, disposal, cleaning or sale may destroy evidence relevant to causation, the exclusion and carrier liability. Necessary survey, sampling and photography should therefore be considered before the condition is materially altered.

An exclusion under the cargo policy also does not establish that the Contracting Carrier, Actual Carrier, warehouse or packing contractor bears no responsibility. Contractual and statutory notice periods, Claim Notice requirements and litigation limits should be preserved without waiting for the insurer's final decision.

Practical Points

The most important discipline in analysing excluded losses is not to work backwards from the conclusion that “the insurer will not pay” and label every case an exclusion.

A structured analysis asks: whether the risk enters the coverage grant; whether the casualty occurred during the insured period; whether the cargo and interest are insured; whether Clauses 4 to 7 apply; whether disclosure or other contractual conditions create a separate issue; and whether causation and quantum can be proved.

Where an insured cause and an excluded cause compete, the analysis should not rely solely on the physical result. Pre-shipment condition, transit events, external casualties, packing, temperature and cargo characteristics should be compared chronologically.

Where an insurer relies on an exclusion, the contractual clause, factual finding, proximate-cause reasoning and any missing evidence should be confirmed in writing where possible. A clear statement of the exclusion basis assists with reconsideration, third-party recovery and improved future insurance design.

Summary

When a marine cargo insurance claim is not paid, the reason is not necessarily a contractual exclusion.

A loss may be outside the listed perils of ICC(B) or ICC(C), outside the insurance period, outside the insured subject matter, unsupported by insurable interest, affected by contractual conditions, or insufficiently proved.

ICC(2009) Clause 4 addresses wilful misconduct, ordinary leakage or loss, insufficient packing, inherent vice, delay, certain insolvency risks and nuclear-related risks. ICC(B) and ICC(C) also contain an additional exclusion concerning deliberate wrongful damage.

Clause 5 addresses unseaworthiness and unfitness of vessels, containers and conveyances, but knowledge, the loading party, timing of loading and certain good-faith assignee protections must be considered.

War, strikes, riots, terrorism and related risks are excluded under Clauses 6 and 7 of the ordinary ICC, but separate cover may apply under Institute War Clauses or Institute Strikes Clauses.

MIA 1906 Section 55 sets out basic English marine-insurance principles concerning wilful misconduct, delay, ordinary wear and tear, ordinary leakage and inherent vice. The specific packing exclusion, however, should be analysed directly under ICC(2009) Clause 4.3.

Pre-contract disclosure differences, Warranty breaches, intentional causation of the casualty and fraudulent claims after the event are separate legal issues. The applicability of the Insurance Act 2015 depends on the actual governing law and policy and should not be applied mechanically to contracts governed by Japanese or other foreign law.

In practice, the physical result of the loss should never be the sole basis of analysis. Cause, transit stage, duration, insured peril, exclusion requirements, additional cover and evidence must all be reviewed.

Even where the cargo policy does not respond, liability may remain with the Contracting Carrier, Actual Carrier, freight forwarder, warehouse, packing contractor or another third party. Third-party rights should therefore be preserved without waiting for the final insurance decision.