Marine cargo insurance: clauses A, B and C and carrier liability limits

WEDNESDAY, 11 NOVEMBER 2026

Carriers are liable for at most 26 SDR per kilo by air, 8.33 on international roads and 1 euro on Italian roads: the guide to insuring goods in transit, with clauses A, B and C, CIF and CIP Incoterms, the 110% value, claim deadlines and an example on 2,000 power banks.

Marine cargo insurance is the policy that pays back the value of goods lost or damaged in transit, by sea, by air or by road. It is needed because the carrier is only liable within limits set by law, often far below the real value of the goods, and in several cases is not liable at all.

For companies importing consumer goods, promotional products or components from Asia, the question is not whether the risk exists, but who covers it and up to what amount. This guide sets out the carriers' liability limits, the A, B and C clauses used in the insurance market, the link with the Incoterms, the deadlines for notifying a loss and a worked example with numbers.

Marine cargo insurance: why the carrier is not enough

Many importers assume that if goods arrive broken or do not arrive, whoever carried them pays. That is not the case. The carrier is only liable if the loss falls within its responsibility, and even then compensation is capped at an amount per kilo or per package, whatever the goods are worth.

In sea transport, the international Hague-Visby Rules also provide major exemptions: the carrier is not liable for loss caused by errors of the master or crew in navigating or managing the ship, nor for loss caused by fire, unless due to its actual fault, nor for perils and accidents of the sea. In other words, a storm that topples a container or a fire on board can leave the importer with no compensation from the carrier at all.

Carrier liability limits, mode by mode

International limits are expressed in special drawing rights (SDR), the International Monetary Fund's unit of account, worth about 1.21 euros on 10 November 2026. These are the main caps:

• sea transport under the Hague-Visby Rules: 666.67 SDR per package or 2 SDR per kilo of gross weight of the goods lost or damaged, whichever is higher;
• air transport under the Montreal Convention: 26 SDR per kilo since 28 December 2024, up from 22 SDR;
• international road transport under the CMR Convention: 8.33 SDR per kilo of gross weight short;
• domestic road transport in Italy, article 1696 of the Civil Code: 1 euro per kilo of gross weight, rising to 3 euros per kilo in international multimodal transport when it is unknown on which leg the loss occurred.

In sea transport, the way goods are described in the bill of lading matters. If a container holds packages listed one by one in the document, each package counts as a unit for the limit; otherwise the whole container counts as a single package. The Italian Civil Code only removes the limit if wilful misconduct or gross negligence of the carrier or its staff is proven, which is hard to do. For light, valuable goods such as electronics or accessories, the per-kilo limit often covers only a small share of the loss.

Clauses A, B and C: what each one covers

In the international market, cargo policies are almost always based on the Institute Cargo Clauses, drafted in London and updated in 2009. Clauses A are an all risks cover: they include any physical loss of or damage to the goods, except for the exclusions expressly listed. They therefore also cover theft, non-delivery of a whole package, rain, damage during loading and unloading and malicious damage by third parties.

Clauses B and C work the other way round: they only cover named perils. Clauses C, the narrowest, include fire and explosion, the ship being stranded, grounded, sunk or capsized, overturning or derailment of land conveyance, collision, discharge at a port of distress, jettison and general average contributions. Clauses B add earthquake, volcanic eruption and lightning, entry of sea, lake or river water into the ship, container or place of storage, and total loss of a package dropped overboard during loading or unloading. Neither B nor C covers theft.

All three exclude some risks: insufficient or unsuitable packing, inherent vice of the goods, ordinary loss in weight, delay, insolvency of the shipowner and wilful misconduct of the insured. War and strikes are excluded from the basic clauses and are covered with dedicated additional clauses. For air transport there is a specific version, the Air clauses, which mirror the cover of clauses A.

Who must insure: Incoterms CIF, CIP and FOB

The duty to insure depends on the Incoterm chosen in the contract. Under Incoterms 2020 only two rules require the seller to take out a policy in favour of the buyer: CIF, usable only for sea or inland waterway transport, requires at least clauses C; CIP, usable with any mode, requires clauses A. The parties may agree a different level, but it must be written in the contract.

With FOB, FCA, EXW and the other rules with no insurance duty, nobody is obliged to insure: risk passes to the importer on delivery and, without a policy of its own, the goods travel uninsured. Even with CIF, it is worth checking what the Chinese seller's policy really covers: clauses C do not cover theft, rain or handling damage, which are precisely the most frequent losses on consumer goods.

How much to insure: the value of the policy

Standard practice, reflected in the Incoterms for CIF and CIP, is to insure at least 110% of the value of the goods stated in the contract, in the contract currency. The extra 10% is meant to cover additional costs and part of the lost margin. For an importer, the reference value usually includes the price of the goods plus freight, with that 10% added on top.

The premium is calculated as a percentage of the insured value and varies with the type of goods, the route, the mode, the packing and the claims history. Frequent shippers can choose an open policy, which automatically covers all shipments in the year through periodic declarations, instead of insuring each load separately. The figures to ask the broker for are the rate applied and the deductible, not just the total premium.

Duration of cover: warehouse to warehouse

The clauses provide warehouse to warehouse cover: the policy starts when the goods are first moved in the origin warehouse for loading and continues during the ordinary course of transit. It ends on delivery to the consignee's final warehouse, or if the goods are placed in storage for storing or distribution outside the ordinary course of transit, or 60 days after discharge from the ship at the final port, whichever comes first.

The 60-day limit matters for importers who leave goods in port or in a customs warehouse awaiting clearance: if the stay drags on, the cover must be extended with the insurer before it expires. The same applies if the destination changes during the voyage.

In case of loss: notices and deadlines to meet

To collect compensation, from the insurer or from the carrier, timing and form matter. Written notices to the carrier preserve the right of recovery, which the insurer will exercise after paying out. These are the deadlines of the main conventions:

• sea, Hague-Visby Rules: written notice at delivery, or within 3 days if the damage is not apparent; legal action within 1 year of delivery;
• air, Montreal Convention: written complaint within 14 days of receipt for damage and within 21 days for delay; action within 2 years;
• road, CMR Convention: reservation at delivery for apparent damage, within 7 days excluding Sundays and public holidays for damage that is not apparent; 1 year limitation period.

In practice it is worth photographing packages and seals before opening, writing reservations on the delivery document, keeping packaging and damaged goods until the surveyor's inspection and notifying the insurer at once, attaching the commercial invoice, packing list and transport document.

A worked example: 2,000 power banks by air

The example is hypothetical, with rounded figures. A promotional products company imports 2,000 branded power banks from China, worth 24,000 euros, with a gross weight of 400 kilos shipped by air; freight costs 3,000 euros. The shipment is lost through the carrier's fault. Under the Montreal Convention the maximum compensation is 26 SDR times 400 kilos, that is 10,400 SDR, about 12,600 euros: just over half the value of the goods, without counting the freight paid.

With a policy based on the Air clauses, the insured value would be 29,700 euros, that is goods and freight plus 10%. Assuming a rate of 0.3%, the premium would be about 89 euros. In case of total loss the insurer would pay up to 29,700 euros and then recover the 12,600 euros of the limit from the carrier. Had the same goods travelled under a supplier's CIF policy based on clauses C, a theft during the stop at the airport would not have been covered at all.

Marine cargo insurance in brief: the checklist

Before confirming an order, it is worth checking these points:

• the Incoterm in the contract and, with CIF or CIP, which clauses apply and who is the beneficiary of the policy;
• the insured value, at least 110% of goods plus freight, in the contract currency;
• the type of clauses: A or Air for consumer goods exposed to theft, rain and handling, plus war and strikes if the route requires it;
• the duration: an extension beyond 60 days if the goods stay in port or in a warehouse;
• the claims instructions: who to notify, within what time and with which documents.

With La Merce, a shipment of power banks or promotional products from China leaves with the value to insure already calculated on goods and freight plus 10%, so the air carrier's limit of 26 SDR per kilo does not become the most the importer can recover.

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