Key takeaways
- Institute Cargo Clauses (A) are all-risks cover, while (B) and (C) are named-perils only - under (C) the most common resin losses (rain wetting through a torn liner, contact contamination, theft of bags) are simply not covered.
- Under Incoterms 2020, a CIF or CIP seller must insure for a minimum of 110% of the contract value - the 'plus 10%' covering the buyer's anticipated profit and incidental costs - but CIF still defaults to the narrow ICC (C) while CIP defaults to the wider ICC (A).
- The standard insurable value for a polymer cargo is CIF + 10%, denominated in the contract currency, with the percentage raised by agreement (or an increased-value policy added) where the buyer's onward sale price is materially higher.
- Wetting and contamination are the dominant polymer claims; recovery hinges on a clean bill of lading, an independent pre-shipment or load survey, and immediate written notice of loss with a surveyor appointed before the cargo is moved or commingled.
A 40-foot container of HDPE film grade arrives at Jebel Ali, the doors open, and the bottom three layers of 25 kg bags are soaked - a torn container liner let rain in during a transhipment wait. Whether the buyer recovers the loss, and how much, is decided almost entirely by two things settled before the box ever sailed: which Institute Cargo Clauses the policy was written on, and what the cargo was insured for. Get those wrong and a five-figure wetting claim becomes an uninsured write-off.
Marine cargo insurance is where Incoterms, the bill of lading and the survey file all converge. The Incoterm sets who is *obliged* to insure and to what minimum standard; the bill of lading records the apparent condition of the goods at loading; and the pre-shipment inspection or load survey establishes the baseline a surveyor measures the loss against. For polymer cargoes - bagged, big-bagged or in liner-bagged bulk containers - the failure modes are specific, and so is the cover you actually need.
Marine cargo cover is standardised internationally on the Institute Cargo Clauses, three tiers with very different scope. ICC (A) is all-risks: it covers loss or damage from any external cause unless specifically excluded. ICC (B) and (C) are named-perils: they cover only the events listed in the wording, and the burden is on the assured to prove the loss fell within a named peril. The gap between them is exactly where polymer losses live.
| Peril / loss type | ICC (A) All-risks | ICC (B) Named perils | ICC (C) Named perils |
|---|---|---|---|
| Fire, explosion, stranding, grounding, collision, overturning | Covered | Covered | Covered |
| General average sacrifice & jettison | Covered | Covered | Covered |
| Washing overboard | Covered | Covered | Not covered |
| Seawater, lake or river water entry into vessel/hold/container | Covered | Covered | Not covered |
| Rainwater wetting via torn liner | Covered | Generally not covered | Not covered |
| Contamination (residue, foreign matter, odour) | Covered (if fortuitous) | Not covered | Not covered |
| Theft, pilferage, non-delivery of bags | Covered | Not covered | Not covered |
| Handling damage / hook & sling tears | Covered | Not covered | Not covered |
| Inherent vice, ordinary moisture pickup | Excluded | Excluded | Excluded |
The practical reading: under ICC (C) almost nothing that typically goes wrong with resin is covered. Rain through a defective liner - the single most common wetting cause - falls outside (C) entirely and usually outside (B), because (B) covers *entry of seawater, lake or river water* and *washing overboard*, not freshwater rain landing on cargo. Theft of bags, hook tears and contamination are (A)-only. For polymers, ICC (A) is the working standard; (B) and (C) belong to robust commodities like steel coil or coal where the buyer accepts named-perils economics.
For bagged and big-bag polymer, the difference between ICC (A) and ICC (C) is the difference between an insured loss and an uninsured one - most resin claims are wetting, contamination or pilferage, none of which (C) touches.
When the seller carries the insurance obligation - under CIF (sea and inland waterway) or CIP (any mode) in Incoterms 2020 - the rules specify a floor, not a ceiling. The seller must insure for a minimum of 110% of the contract (CIF/CIP) value, in the contract currency, covering the carriage from the named point to the named destination. Incoterms 2020 split the default cover level so that CIP now requires the wider ICC (A), while CIF still defaults to the narrow ICC (C) - a trap for resin buyers who assume CIF means comprehensive cover.
The '+10%' is the insurable value uplift. The base is the CIF value (goods + freight + insurance); the extra 10% is a conventional allowance for the buyer's anticipated profit and the incidental costs a loss also destroys - survey fees, finance charges, disposal of damaged material, and the cost of sourcing replacement tonnes at short notice. A cargo invoiced at USD 500,000 CIF is therefore insured for USD 550,000. Where the buyer's onward resale margin is materially higher, the percentage should be raised by agreement or covered by a separate increased-value policy.
| Component | Basis | Amount (USD) |
|---|---|---|
| Goods value (FOB) | ~21 MT at an indicative unit price | ~24,000 |
| Ocean freight | 1 x 40' HC, indicative lane rate | ~2,800 |
| Insurance premium | Small percentage of insured value | ~25 |
| CIF value | Goods + freight + insurance | ~26,825 |
| Insurable value | CIF x 110% | ~29,510 |
Two contract points to lock down. First, denominate the policy in the contract currency - a claim settled in a depreciated currency erodes the recovery. Second, specify ICC (A), warehouse-to-warehouse, with the transit clause running from the seller's warehouse to the buyer's final store, not merely port-to-port; the riskiest moments for bagged resin are often the inland legs and terminal handling, not the open-sea passage. If you are buying CIF, write the (A) cover and the warehouse-to-warehouse term into the contract explicitly, because the default will not give them to you. Where you control the carriage instead, see how this fits the wider Incoterms 2020 allocation of cost and risk.
Polymer cargoes fail in a narrow set of recognisable ways, and a buyer who knows the pattern can both prevent and prove them. The dominant categories:
- Wetting - freshwater (rain through a torn or badly fitted container liner, condensation or 'container rain' from temperature swings) or saltwater (deck stow on breakbulk, hold flooding). Pellets are largely hydrophobic, but wet bags fail, cake and pick up surface moisture that disrupts downstream drying and processing.
- Contamination - foreign residue from a previous cargo in an uncleaned container, oil or grease from handling, dust ingress, odour taint, or cross-grade commingling. For food-contact and medical grades this is often a total loss regardless of pellet condition, because the certification chain is broken.
- Physical damage - bag tears from hook-and-sling handling, crush damage from poor stacking, big-bag (FIBC) seam failure, and spillage. Usually partial losses but cumbersome to quantify.
- Theft, pilferage and shortage - missing bags or pallets, short-loaded containers, and non-delivery. Covered under (A), invisible to (C).
- Heat and self-heating - rarely the resin itself, but adjacent cargo or container hot-spots can deform or block low-melt grades.
Note the exclusions that survive even under ICC (A): inherent vice and ordinary moisture pickup in hygroscopic resins are not recoverable. A nylon or PET cargo that arrives high in moisture because it was shipped without adequate desiccant and barrier packaging is an inherent-vice argument the underwriter will run hard. This is precisely why a documented load survey and a correct packaging specification protect the claim - they separate a fortuitous insured event from a foreseeable packaging failure the insurer can decline.
A clean claim is built before the loss, not after it. The recoverable file rests on three pillars: a clean bill of lading establishing the goods were in apparent good order at loading; an independent survey (pre-shipment or load survey) fixing the baseline condition and quantity; and prompt, correct notice with a surveyor on the cargo before it is moved or commingled. Miss any one and the underwriter has room to discount or decline.
| Step | Action | Why it matters |
|---|---|---|
| 1. Inspect on arrival | Open and inspect before signing the delivery receipt | A clean receipt on damaged cargo undermines the claim |
| 2. Clause the receipt / EIR | Note visible damage on the delivery or equipment interchange report | Documents condition at the point of handover |
| 3. Notify insurer / agent | Immediate written notice of loss per the policy | Late notice is a common ground for declinature |
| 4. Appoint surveyor | Independent surveyor before cargo is moved or commingled | Establishes cause and quantum; separates insured peril from exclusion |
| 5. Protect recovery rights | Lodge a written holding claim against the carrier in time | Preserves the insurer's subrogation against the liable party |
| 6. Mitigate the loss | Take reasonable steps to prevent further damage | A duty of the assured; failure can reduce recovery |
| 7. Submit documents | Policy/certificate, invoice, packing list, B/L, survey report, photos | The evidence pack the underwriter assesses |
Two recovery rights run in parallel and must both be protected. The cargo policy responds to the assured; separately, the carrier may be liable under the contract of carriage, but liability is capped - under the Hague-Visby Rules at 2 SDR per kilogramme or 666.67 SDR per package or unit, whichever is higher, which for low-value-per-kilo resin is usually well below the cargo's worth. That cap is exactly why first-class cargo insurance, not reliance on carrier liability, is the buyer's real protection. When the insurer pays, it takes over your claim against the carrier by subrogation - so a timely written holding claim against the line preserves the recovery the insurer will pursue on your behalf.
The discipline is simple to state and easy to neglect: buy ICC (A) warehouse-to-warehouse at CIF + 10% in the contract currency, fix the baseline with an independent load survey, keep the bill of lading clean, and move within hours - not days - when cargo arrives damaged. The buyers who recover in full are the ones who built the file before the box was sealed. If you want the insurance and survey terms written correctly into your next contract, the OmniaStrata desk can structure them with the trade - talk to us via our contact desk.
Frequently asked
Questions on the desk
Does the CIF seller's insurance protect me as the buyer?
Only at the bare minimum. Under Incoterms 2020, a CIF or CIP seller must insure for 110% of contract value, but CIF defaults to the narrow ICC (C) named-perils cover while CIP defaults to the wider ICC (A). ICC (C) excludes rain wetting, contamination and most handling damage - the very losses polymers suffer most. For resin shipped CIF, negotiate ICC (A) all-risks cover into the contract, or buy your own gap policy.
What does 'insurable value CIF + 10%' actually mean?
The sum insured is the CIF (or CIP) invoice value of the cargo plus a 10% uplift. The extra 10% is a conventional allowance for the buyer's anticipated profit and incidental expenses (finance, survey, disposal) that a total loss would also destroy. So a USD 500,000 CIF cargo is insured for USD 550,000. If your resale margin is larger, raise the percentage by agreement or add an increased-value policy.
What is the difference between ICC (A), (B) and (C)?
ICC (A) is all-risks: everything is covered unless specifically excluded. ICC (B) and (C) are named-perils, covering only the listed events. (B) adds, among others, washing overboard and entry of seawater, lake or river water into the vessel, hold or container; (C) is the narrowest - fire, stranding, collision, general average and jettison, but no water ingress or contamination. For bagged or big-bag polymer, only (A) reliably covers wetting and contamination.
What do I need to file a successful resin cargo claim?
A clean bill of lading, the commercial invoice and packing list, the policy or certificate of insurance, a pre-shipment or load survey, photographs, and - critically - immediate written notice of loss with an independent surveyor appointed before the cargo is moved or commingled. Lodge a written holding claim against the carrier in time to protect the insurer's subrogation rights, and never sign a clean delivery receipt for visibly damaged cargo.
Is contamination of pellets actually covered?
Under ICC (A) all-risks, generally yes - fortuitous contamination (for example a previous cargo's residue in an uncleaned container, or seawater ingress carrying salt and dirt into the pellets) is normally recoverable. Under ICC (B) or (C) it usually is not. Inherent vice, ordinary moisture pickup in hygroscopic resins, and pre-existing off-spec material are excluded under all clauses - which is why an independent load survey matters.
General market commentary from the OmniaStrata desk, provided for information only. It is not legal, financial, tax, or trading advice, and it is not an offer or a commitment to any terms. Figures such as price ranges, spreads, financing costs, and credit periods are illustrative market context, not OmniaStrata's rates or terms. Actual contract terms — including price, payment instrument, credit, insurance, and Incoterms — are agreed in writing on a per-transaction basis and at OmniaStrata's discretion. Market conditions change; figures reflect the publication date.