Marine Insurance Glossary: A-Z

Quick answer: Marine cargo insurance uses a specific set of technical terms — Institute Cargo Clauses, General Average, proximate cause, SRCC, and more — that determine exactly what is and isn't covered on a shipment. This glossary explains each term in plain language, so exporters, importers, and CHAs can read their own policy documents with confidence instead of guessing what the clauses actually mean.

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A

All Risks See Institute Cargo Clause A.

Average Clause A policy condition that reduces a claim payout proportionally when cargo is insured for less than its correct value. If a shipment is insured at 70% of its true CIF value, a valid claim is paid at only 70% of the assessed loss — not the full amount. See also Underinsurance.

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B

Bill of Lading (B/L) A legal document issued by the carrier (shipping line) acknowledging receipt of cargo for shipment. It serves as a receipt, a contract of carriage, and often a document of title, and is one of the core documents required when filing a marine insurance claim.

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C

CIF (Cost, Insurance, and Freight) An Incoterm under which the seller pays the cost of goods, insurance, and freight to the named destination port. The seller is contractually required to arrange marine insurance for the buyer's benefit, though the Incoterms-minimum requirement is only Institute Cargo Clause C unless a higher level is agreed.

CIP (Carriage and Insurance Paid To) An Incoterm similar to CIF but usable for any mode of transport, under which the seller must arrange insurance on the buyer's behalf — with a higher minimum requirement (Institute Cargo Clause A) than CIF under Incoterms 2020.

Claim A formal request made by the insured to the insurer for payment following a covered loss or damage event, typically supported by a survey report and shipment documentation.

CHA (Customs House Agent) A licensed professional or firm authorized to handle customs clearance formalities on behalf of importers and exporters, often coordinating closely with marine insurance arrangements for the shipments they clear.

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D

Deductible / Excess The portion of a claim that the insured bears themselves before the insurer's payment begins, typically set as a fixed amount or percentage of the claim value.

Delay (Exclusion) A standard exclusion in marine insurance policies: loss, damage, or expense caused purely by delay is not covered, even when the delay itself was caused by an insured peril such as bad weather or port congestion.

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F

FOB (Free On Board) An Incoterm under which the seller's responsibility ends once goods are loaded on board the vessel at the port of shipment. Risk transfers to the buyer at that point, and the buyer is responsible for arranging their own marine insurance from there.

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G

General Average A centuries-old maritime law principle: when a ship's master deliberately sacrifices part of the cargo or the vessel to save the voyage as a whole (for example, jettisoning containers during an emergency), every cargo owner who benefits from that sacrifice shares the cost proportionally — even if their own cargo was never damaged.

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I

ICC A / B / C (Institute Cargo Clauses) The standard set of marine cargo insurance clauses defining what is covered:

• Clause A — the broadest cover, often called "All Risks," covering loss or damage from any cause except specific listed exclusions
• Clause B — narrower cover, listing specific insured perils such as fire, sinking, and stranding
• Clause C — the narrowest standard cover, limited to major casualty events

Incoterms International Commercial Terms, published by the International Chamber of Commerce (ICC), defining who arranges transport, who bears risk at each stage, and who pays which costs in an international sale of goods — including, for CIF and CIP specifically, who must arrange insurance.

Insurable Interest A legal requirement that the person taking out an insurance policy must have a genuine financial stake in the insured cargo — meaning they would suffer a real financial loss if it were damaged or lost.

IRDAI The Insurance Regulatory and Development Authority of India, the government body that licenses and regulates insurance companies, agents, corporate agents, and brokers operating in India.

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M

Marine Open Policy Also called an Annual Open Cover, an umbrella marine insurance policy that automatically covers every shipment made by the insured during the policy period, based on periodical declarations, rather than requiring a fresh policy for each shipment.

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P

Perils of the Sea A traditional marine insurance term referring to accidental, fortuitous events at sea — such as heavy weather, stranding, or collision — as distinct from ordinary wear and tear or inherent vice in the cargo.

Premium The amount paid by the insured to the insurer in exchange for marine insurance cover, calculated based on factors including cargo type, insured value, route, and claims history.

Proximate Cause The dominant, operative cause of a loss. Insurers assess claims based on the proximate cause, not simply whether damage occurred — meaning a claim can be declined if the surveyor attributes the loss to an excluded cause (such as poor packing) rather than an insured peril, even though the cargo genuinely arrived damaged.

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S

Salvage The recovery or preservation of a ship or cargo after an accident at sea, or the value of damaged goods that can still be recovered and sold, which is typically deducted from a claim settlement.

SRCC (Strikes, Riots & Civil Commotion) A marine insurance clause covering loss or damage caused by strikes, riots, and civil commotion — civil disturbance risks not automatically covered under a basic policy unless this clause is specifically included.

STOP Policy (Sales Turnover Policy) A marine insurance policy where premium is calculated on a company's projected annual sales turnover instead of shipment-by-shipment declared value, commonly used by large, high-volume, multi-location manufacturers.

Sue and Labour Clause A clause placing a positive duty on the insured to take reasonable steps to minimize or prevent further loss to damaged cargo, with the insurer typically reimbursing reasonable costs incurred in doing so.

Subrogation The insurer's legal right, after paying a claim, to pursue recovery from a third party (such as a carrier) responsible for the loss, stepping into the insured's legal position for that purpose.

Surveyor An independent, typically insurer-appointed professional who inspects damaged cargo and issues a survey report documenting the extent, nature, and likely cause of the loss — a central piece of evidence in most marine insurance claims.

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T

Transhipment The transfer of cargo from one vessel to another during its journey, typically at an intermediate port, before continuing to the final destination.

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U

Underinsurance Insuring cargo for less than its correct value, which triggers the average clause and proportionally reduces claim payouts. See also Average Clause.

Utmost Good Faith A foundational principle of insurance law requiring both the insured and insurer to disclose all material facts honestly at the time a policy is taken out — non-disclosure or misrepresentation can be grounds for a claim to be declined later.

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W

War Clause A marine insurance clause covering loss or damage caused by war, invasion, and related perils, generally excluded under a basic policy unless specifically added.

Warehouse-to-Warehouse Clause A marine insurance clause extending cargo cover from the point it leaves the sender's warehouse, through the entire transit journey, to the point it reaches the final destination warehouse — rather than only covering the ocean or port-to-port leg.

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Why This Glossary Matters

Marine insurance disputes and claim rejections very often trace back to one of these terms being misunderstood at the time a policy was purchased — the wrong Institute Cargo Clause, an unclear proximate cause, or an assumption about who was responsible for insurance under a given Incoterm. Understanding this vocabulary isn't academic — it's often the difference between a claim that settles cleanly and one that gets disputed.

(For deeper coverage of related topics, see our guides on why marine insurance claims get rejected, how to file a marine insurance claim, and who is responsible for insurance under FOB, CIF, and CFR terms.)

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How CargoCover Advisory Uses This Vocabulary in Practice

Understanding these terms is one thing — having someone apply them correctly to your actual shipments is another. CargoCover Advisory structures every policy with these concepts explicitly addressed upfront:

• The correct Institute Cargo Clause for your commodity, not a default assumption
• 110% of CIF value as standard, avoiding average clause penalties from underinsurance
• War Clause and SRCC built in as standard, not left as a gap
• Warehouse-to-warehouse cover matched to your actual factory-to-destination route
• Clear guidance on insurable interest and Incoterms responsibility, so you know exactly who is meant to insure your shipment

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Frequently Asked Questions

What is the difference between Institute Cargo Clause A, B, and C? Clause A offers the broadest "All Risks" cover, Clause B covers a defined list of specific perils, and Clause C offers the narrowest cover, limited to major casualty events — the choice significantly affects what a claim can be paid for.

What does "proximate cause" mean in a marine insurance claim? It refers to the dominant, operative cause of a loss. Insurers assess claims based on this cause, meaning a claim can be declined if the actual damage is attributed to an excluded cause rather than an insured peril, even if the cargo is genuinely damaged.

What is General Average, in simple terms? It's a rule where, if a ship's captain sacrifices part of the cargo to save the vessel and the rest of the cargo during an emergency, every cargo owner on that voyage — even those whose goods were untouched — shares the cost proportionally.

Why does the Warehouse-to-Warehouse Clause matter? Without it, marine insurance cover might only apply to the ocean or port-to-port leg of a journey, leaving inland transit before and after the sea voyage uninsured.

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Understanding your policy's terms shouldn't require a law degree. Connect with CargoCover Advisory and we'll walk you through exactly what your cover means, in plain language.

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About the Author

Ms. Ankita Agrawal is the CEO of CargoCover Advisory, a licensed corporate insurance agency based in Indore, Madhya Pradesh, working with exporters, importers, and CHAs across India on marine cargo insurance policy structuring and claims support. Read more about CargoCover Advisory.

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