Introduction to Specialized Cargo Risks

In the realm of marine cargo insurance, the standard Institute Cargo Clauses (A, B, and C) serve as the foundation for coverage. However, these primary clauses contain strict exclusions regarding risks associated with war and labor disturbances. Specifically, Clauses 6 and 7 of the standard ICC set forth the War Exclusion and Strikes Exclusion, respectively. To obtain protection against these perils, shippers must purchase separate endorsements known as the Institute War Clauses (Cargo) and the Institute Strikes Clauses (Cargo).

Understanding these clauses is vital for candidates preparing for the complete Marine exam guide. Unlike standard transit risks, war and strikes risks are subject to unique duration limits and cancellation provisions due to their volatile nature. This article explores the nuances of these specialized coverages and how they interact with the primary cargo policy.

The Institute War Clauses (Cargo)

The Institute War Clauses provide indemnity for loss of or damage to the subject-matter insured caused by war, civil war, revolution, rebellion, or insurrection. It also covers capture, seizure, arrest, restraint, or detainment arising from these perils, as well as derelict weapons of war such as mines and torpedoes.

A critical distinction of the War Clauses is the Waterborne Agreement. Unlike the standard ICC (A), which provides "warehouse-to-warehouse" coverage, War coverage is generally limited to the period the cargo is on the overseas vessel. Key parameters include:

  • Coverage commences when the goods are loaded on the overseas vessel.
  • Coverage terminates when the goods are discharged at the final port of discharge.
  • There is a limited provision (usually 15 days) for coverage at an intermediate port if the goods remain on the vessel or are transshipped.
  • Coverage does not extend to land transit before loading or after discharge.

Comparison: War vs. Strikes Coverage

FeatureInstitute War ClausesInstitute Strikes Clauses
Duration of RiskWaterborne only (Vessel to Vessel)Transit (Warehouse to Warehouse)
Key PerilsWar, Revolution, Mines, SeizureStrikers, Riots, Terrorists
Land TransitExcludedIncluded (if part of transit)
Cancellation7 days notice usually required7 days (sometimes 48 hours for specific regions)

The Institute Strikes Clauses (Cargo)

The Institute Strikes Clauses (Cargo) protect against physical loss or damage caused by strikers, locked-out workmen, or persons taking part in labor disturbances, riots, or civil commotions. Importantly, these clauses also cover damage caused by any person acting from a political, ideological, or religious motive (terrorism).

Unlike the War Clauses, the Strikes Clauses follow the standard Transit Clause duration. This means the cargo is protected from the time it leaves the warehouse for the commencement of transit until it reaches the destination warehouse. This is a common area of confusion for students taking practice Marine questions, as they may assume both clauses share the waterborne limitation.

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The Frustration Clause

Both War and Strikes clauses contain a 'Frustration Clause.' This excludes claims based on the loss of the adventure (the commercial purpose of the voyage) caused by the arrest, restraint, or detainment of the vessel. The insurance covers the physical loss of the goods, not the financial loss resulting from the delay or inability to complete the voyage.

Key Principles of War and Strikes Coverage

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7 Days
Notice Period
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Waterborne
War Duration
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Warehouse-to-Warehouse
Strikes Duration
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Strikes Clause
Terrorism

Common Exclusions in War and Strikes Clauses

Even when these clauses are added to a policy, certain exclusions remain in effect. These are designed to ensure the underwriter is not liable for losses within the control of the assured or losses that are non-accidental in nature:

  • Ordinary Leakage/Wear and Tear: Standard exclusions regarding the nature of the goods still apply.
  • Insufficiency of Packing: Loss caused by inadequate preparation for transit is not covered.
  • Inherent Vice: Damage caused by the internal characteristics of the cargo (e.g., spontaneous combustion of coal) is excluded.
  • Delay: Any loss, damage, or expense proximately caused by delay, even if the delay was caused by a covered peril.
  • Insolvency: Loss arising from the financial default of the vessel owners or operators.
  • Nuclear Exclusion: Loss or damage arising from weapons of war employing atomic or nuclear fission.

Frequently Asked Questions

Underwriters limit War coverage to the overseas vessel to avoid catastrophic accumulations of risk in ports or warehouses on land, where a single event could destroy massive amounts of insured cargo across multiple policies.
No. The Institute Strikes Clauses cover physical loss of or damage to the cargo caused by strikers. They do not cover expenses arising from the delay of the vessel or the costs of hiring replacement labor.
Under the current Institute Clauses, terrorism (acts by persons acting from political, ideological, or religious motives) is specifically included under the Strikes Clauses, not the War Clauses.
Underwriters maintain a 'Notice of Cancellation' clause (usually 7 days) which allows them to cancel or vary the terms of coverage if a conflict breaks out or the risk profile changes significantly. However, once the cargo is loaded and the vessel has sailed, the coverage for that specific transit typically remains in force until arrival.