ICC 1963

I. Term content and usage

FPA: Free of Particular Average (FPA) is an insurance contract clause that
eliminates an insurer’s liability for partial losses attributable to perils of the sea or
incidents where the vessel has been sunk, burned, or stranded during the course of
the voyage. FPA clauses are most commonly found in marine insurance policies.
WA: With Average (WA) — an ocean marine policy provision that covers partial
loss of below deck cargo on the same basis as a total loss—that is, for loss by the
same perils and regardless of what percentage of the total insured value is damaged
or lost.
AR: This insurance is against all risks of loss of or damage to the subject-matter
insured but shall in no case be deemed to extend to cover loss damage or expense
proximately caused by delay or inherent vice or nature of the subject-matter
insured. Claims recoverable hereunder shall be payable irrespective of percentage.
Comparison
Loss caused by or Free of particular With average All risks (AR)
resulting from : average (FPA) (WA)
Stranding Yes Yes Yes
Sinking Yes Yes Yes
Burning Yes Yes Yes
Collision Yes Yes Yes
Faults or errors in Yes Yes Yes
the management
of the vessel
Bursting of boilers Yes Yes Yes
Latent defects in Yes Yes Yes
hull or machinery
Explosion Yes Yes Yes
Jettison Yes Yes Yes
Heavy weather No No Yes
Seawater as a No No Yes
result of heavy
 weather
Freshwater No No Yes
Improper stowage No No Yes
by the carrier
Hook damage, No No Yes
mud and grease
Theft of an entire No No Yes
shipping package
Non-delivery of No No Yes
an entire shipping
package
Pilferage No No Yes
Leakage No No Yes
Breakage No No Yes

Old ICC (1963) New ICC (1982/2009)

FPA C
WA B
AR A

Grounding (nằm cạn): in ICC 1963, The insurer does not pay compensation
usually for losses caused by grounding because it is said that grounding is not an
accidence. However, in ICC 1982 Coverage of the insurer's liability both stranding
and grounding.
Risks coverage: In ICC 1963, water into the vessel, the craft is covered under all 3
conditions (FPA, WA, AR), but in the 1982 ones, the risk caused by waves is only
covered under Clause (A) and Clause (B), not covered under Clause (C). moreover,
the insured need to prove that goods were indeed swept into the sea, not simply
lost overboard, and this risk is not extended to cover cargo on deck is lost due to
falling into the sea when the ship shakes.
 ICC 2009

Clause A: Also known as “all risks”, Clause A covers all physical loss or damage
to the cargo from any external cause. While it is the widest form of insurance
coverage, it also has the highest premium. There is a version of Clause A
specifically for air freight called “Clause Air”, which specifies the aircraft
involved.

Clause B: Clause B provides a more restricted form of coverage, or partial cargo

coverage, for a moderate premium.

Clause C: Clause C is the most restrictive coverage, and essentially only covers
damage to the cargo in case of ship malfunction, including collision, fire,
explosion, sinking, or stranding. It has the lowest premiums of the 3 types of
marine cargo insurance.

Summary of Institute Cargo Clauses Coverage

Loss or damage Clause A Clause B Clause C
caused by:
General Average Yes Yes Yes
Both to Blam Yes Yes Yes
Collision
Fire or explosion Yes Yes Yes
Vessel or craft Yes Yes Yes
being stranded
Overturning or Yes Yes Yes
derailment of land
conveyance
Collision or Yes Yes Yes
contact of vessel,
craft or
conveyance with
any external oject
 other than water
Discharge of Yes Yes Yes
cargo at a port of
distress
General average Yes Yes Yes
sacrifice
Jettison Yes Yes Yes
Earthquake, Yes Yes No
volcanic eruption
or lightning
Washing Yes Yes No
overboard
Entry of sea, lake Yes Yes No
or river water into
vessel, craft, hold,
conveyance,
container, liftvan
or place of storage
Total loss of any Yes Yes No
package lost
overboard or
dropped whilst
loading on to or
unloading from
vessel of craft
Theft or Pilferage Yes No No
Contamination Yes No No
(own damage)
Rain &/or fresh Yes No No
water damage

General
To promote clarity, there has been some updating of the language used in the
Clauses. In particular:
 1. A definition of the ‘Assured’ has been inserted for extra clarity. It now
expressly includes either the person by or on whose behalf the contract of
insurance was effected or assignee.
2. The terms ‘goods’ and ‘cargo’ does not accurately describe the range and
type of cargoes so they have been replaced by ‘subject-matter insured’.
3. The term ‘underwriters’ has been replaced by ‘insurers’.
4. The side headings to the Clauses have been modified and placed in a more
conventional manner above each of the Clauses.
5. The more modern term ‘employees’ has replaced the rather archaic term
‘servants’ to be a more understandable term for use of the Clauses
worldwide and does not alter the legal position of the rights of the assured.

Comparison between ICC 2009 and ICC 1982

Insufficiency of Packing or Preparation (Clause 4.3) is extended in a more

favorable direction for the insured. According to the 2009 version, packing loss
is excluded. only when packing is carried out by the insured or their servants.
The change of this exclusion affects the case of goods purchased at FOB and CFR
prices, where the conclusion of the guarantee is made by the buyer.

Insolvency and Financial Default (Clause 4.6) has been revised for the better in
favor of the insured. The ICC 1982 provides for loss, damage or expense
resulting from insolvency or financial deprivation in the owner, charterer or
operator of the ship. But in the 2009 version, the regulation only excludes the
case where the insured is aware or should be aware of his or her financial
deprivation. However, if the goods are sold or there is a guarantee from the buyer
to buy the goods, losses are not excluded.
Nuclear Fission and/or Fusion exclusions (Clause 4.5, 4.7) are further
elaborated by further specifying the Institute Radioactive Contamination
Exclusion Clause of 2002. Nuclear fusion is even more extensive including
weapons and equipment used for nuclear weapons war.

Unseaworthiness and Unfitness exclusion (Clause 5) is extended in favor of the

insured. Coverage is excluded only when the Assured discloses the unfitness of
the vessel or barge. This clause 5 shall not apply in case the goods are
committed to having a buyer. However, it is very rare for the insurer to
disclose the condition of the ship as unseaworthy except.

Terrorism (Clause 7): is defined for the purpose of clarifying the meaning in
clause 7.3 and adding clause 7.4 The Transit clause (Clause 8: adjusted in favor of
the insured. In addition to clause 8.3, the insurance shall terminate when the
Assured or an employee of the Insured decides to use any other means of transport
or container for the carriage of the goods in the usual manner". In ICC 1982
stipulates that the goods must be delivered to the destination listed on the policy
first.

The Change of Voyage clause (Clause 10): expanded by removing the phrase
"held covered". This means that when changing the place of delivery, in some
cases, if necessary, it is possible to change the insurance rate, but it is not certain
to keep the insurance premium and negotiate separately as stated in ICC
1982. In addition, there is the addition of clause 10.2.