Marine Cargo Insurance — full guide

Marine Cargo Insurance — in detail

1. What is marine cargo insurance?

Marine cargo insurance is a non-life policy covering the risk of loss or damage to goods carried by sea, air or multimodal transit.

Depending on the trade term (Incoterms), it covers the risk from the seller's warehouse to the buyer's warehouse, and the sum insured is generally set at CIF × 110%.

2. How cargo clauses evolved

International cargo clauses originate from Lloyd's S.G. Policy of 1779 in England, developing into the old clauses (ICC) in 1963 and the new clauses (ICC) in 1982.

1779

S.G. Policy Form

The standard marine policy form used at Lloyd's. Its archaic wording often led to interpretation disputes.

1963

Old clauses (ICC 1963)

The (old) Institute Cargo Clauses, comprising ICC(F.P.A), ICC(W.A) and ICC(A/R).

1982

New clauses (ICC 1982)

The new Institute Cargo Clauses, comprising ICC(C), ICC(B) and ICC(A), used as standalone clauses.

Today

Korean market

Both the 1963 old clauses and 1982 new clauses are in use, applying English marine insurance law as the governing law.

3. Risk coverage compared (old vs new clauses)

A side-by-side view of which risks are covered under the three old clauses (A/R, W.A, F.P.A) and the three new clauses (A, B, C).

Risk / type of loss	Old clauses			New clauses
	A/R	W.A	F.P.A	A	B	C
Fire / explosion	○	○	○	○	○	○
Stranding, grounding, sinking or capsizing of vessel/craft	○	○	○	○	○	○
Overturning or derailment of land conveyance	○	○	○	○	○	○
Collision or contact with another object	○	○	○	○	○	○
Discharge of cargo at a port of distress	○	○	○	○	○	○
General average sacrifice / jettison	○	○	○	○	○	○
Earthquake, volcanic eruption, lightning	○	○	×	○	○	×
Risks during loading, discharge or transhipment	○	△	△	○	○	×
Washing overboard	○	○	×	○	○	×
Sea/lake/river water ingress (wetting)	○	end.	end.	○	○	×
Loss overboard during loading/discharge (per package)	○	end.	end.	○	○	×
Theft, non-delivery, rain/fresh-water wetting, breakage, bending, leakage, shortage	○	end.	end.	○	×	×
Any other fortuitous external cause (all risks)	○	×	×	○	×	×
Wrongful or malicious act by a third party	○	×	×	○	×	×

○ total & partial loss covered / △ total loss per package covered / end. = covered when a separate endorsement is added / × excluded

4. Trade terms — Incoterms 2010

Incoterms, published by the International Chamber of Commerce (ICC), are terms of the sale contract — not the carriage contract. The trade term determines whether the seller or the buyer is the party that takes out insurance.

Term	Meaning	Risk transfer point	Insuring party
Group E — departure
EXW	Ex Works	On leaving the works	Buyer
Group F — main carriage unpaid
FCA	Free Carrier	On handover to the carrier	Buyer
FAS	Free Alongside Ship	When placed alongside the ship	Buyer
FOB	Free On Board	On delivery over the ship's rail	Buyer
Group C — main carriage paid
CFR	Cost and Freight	On delivery over the ship's rail	Buyer
CIF	Cost, Insurance, Freight	On delivery over the ship's rail	Seller
CPT	Carriage Paid To	On handover to the carrier	Buyer
CIP	Carriage and Insurance Paid To	On handover to the carrier	Seller
Group D — arrival
DDP	Delivered Duty Paid	On delivery at the named destination	Seller
DAT	Delivered at Terminal	On unloading at the named terminal	Seller
DAP	Delivered at Place	When ready for unloading at destination	Seller

※ Under CIF · CIP · DDP · DAT · DAP, the seller (exporter) takes out insurance. Under the other terms, the buyer (importer) does.

5. Item-specific rules

Even under All Risks (ICC(A) / A/R), certain commodities have some extraneous risks excluded. For those items, coverage can be extended with a separate endorsement + additional premium.

Item code	Commodity	Excluded risk (covered when endorsed)
202	Raw hide, raw skin	Oil/other-object contact, hook damage, humidity
203	Grain, feed, oilseed	Shortage, humidity
209-01	Liquid chemicals (bottled)	Shortage from bottle breakage
209-02	Solid chemicals (other than drum/can)	Shortage from bag tearing
209-03	Explosives	Explosion risk
209-04	Pharmaceuticals (bottled)	Shortage risk
210-01	Foodstuffs	Humidity risk
210-02	Raw sugar	Shortage risk
215-01	Ferrous metals	Rust, oxidation, discoloration
215-01/02	Ferrous/non-ferrous metals (scrap, powder)	Rust, oxidation, discoloration, shortage
216	Machinery	Special Replacement Clause (for secondhand machinery)
217	Glass, ceramics, furniture	Breakage risk
303	General goods (fragile cargo)	Breakage risk

6. Documents required to apply

Please prepare the following 7 documents. You can send them via cargoinsu.com's consultation channels when requesting a firm quote.

Business registration certificate (copy)corporate / sole-trader

Commercial Invoicevalue basis

L/C (Letter of Credit)for L/C trade

B/L (Bill of Lading)transport details

Offer Sheetoffer to sell

Packing Listpacking details

Product specificationcargo spec & characteristics

7. Why marine cargo insurance matters

Fills the carrier's liability limits — carriers are exempt for perils of the sea (e.g. errors in navigation). The cargo owner protects itself with insurance.
Fast claims handling — the insurer adjusts and settles losses through an appointed surveyor as soon as an incident occurs.
Meets bank requirements — in L/C trade the bank requires a cargo insurance certificate; without it, shipping documents are treated as discrepant.
Subrogation handled for you — the insurer exercises recovery against carriers and stevedores on your behalf, so you can stay focused on your business.

8. Additional / extension clauses

Beyond the base clauses, coverage can be extended by adding the following.

War Risks — Institute War Clauses (Cargo) attached
SRCC (Strikes, Riots, Civil Commotions) — strike/riot/civil-commotion loss
Theft, Pilferage, Non-Delivery — when combined with old W.A / F.P.A clauses
Rejection — cargo rejected at import quarantine (food, agricultural products)
Refrigerating Machinery Clauses — loss from refrigeration breakdown (frozen/chilled cargo)
On-Deck Clauses — separate clauses for deck cargo (sealed containers on deck treated as under-deck)
Special Replacement Clauses — part-by-part replacement cost for machinery

9. Frequently asked questions

How is the sum insured calculated?

Generally 110% of the CIF (Cost + Insurance + Freight) value — cargo cost, insurance and freight plus a 10% expected profit. The cargoinsu.com calculator shows the 110% figure automatically.

Which FX rate applies?

The KEB Hana Bank first-quote T/T selling rate is the market standard; the Export-Import Bank of Korea daily rate is equally acceptable. The cargoinsu.com calculator applies the prior-day closing rate automatically.

How is the premium determined?

Premium = sum insured × base rate × discount/loading factor + additional premium. The base rate depends on cargo type, origin, destination, conveyance and clause condition; the minimum premium is ₩13,000 (KIDI reference rate basis).

New clauses or old clauses — which should I choose?

Both are used in Korea; new ICC(A) and old A/R give the broadest cover. Bulk cargo such as grain or minerals commonly uses new ICC(C) or old F.P.A. In L/C trade, the clause follows the credit terms.

Under CIF, who takes out the insurance?

Under CIF · CIP · DDP · DAT · DAP, the seller (exporter) insures. Under EXW · FCA · FAS · FOB · CFR · CPT, the buyer (importer) insures. Even where the seller is obliged to insure, the buyer sometimes takes out additional cover (double insurance).

How is on-deck cargo handled?

Enter the deck-stowage proportion of total cargo value. However, cargo packed in sealed containers and stowed on deck is treated as under-deck. Ordinary deck cargo is subject to separate On-Deck Clauses.

When is the certificate issued?

After an instant quote on cargoinsu.com and a formal application, the certificate is issued within 1–2 business days. For L/C trade, certificate issue before shipment is essential; without it the shipping documents may be deemed discrepant.

What should I do if an incident occurs?

If damage is found on taking delivery, issue a Notice of Loss to the carrier immediately and report the claim to the insurer. The insurer's appointed surveyor adjusts the loss; do not dispose of the cargo in the meantime. The insurer exercises subrogation on your behalf.

Things to note

When applying, confirm the basics of the contract — product name, period of insurance, premium payment term and the insured — and be sure to receive and read the policy wording and product brochure.
Coverage exclusions are set out in each insurer's policy wording and brochure; refer to them for details, as claims may be limited by exclusions or payment-limitation grounds.
If the insured event has already occurred when the contract is concluded, the contract is void.
Duty of disclosure: the policyholder, the insured or their agent must answer the application/questionnaire truthfully; otherwise a claim may be declined or the contract cancelled.
Cooling-off: a policyholder may generally withdraw the application within 15 days of receiving the certificate; note that commercial (corporate) insurance taken out by a professional financial consumer cannot be withdrawn.
Providing special benefits in connection with an insurance contract is punishable under the Insurance Business Act.
N2N Insurance Brokerage is a broker registered under Article 89 of the Insurance Business Act; it does not represent any single insurer and advises on the client's side (FSS Reg. No. 2026-012201 · Business Reg. No. 611-23-02374). Application and acceptance follow each insurer's wording.

Full Korean statutory disclosures — depositor protection, tax treatment, signature requirements, the insurance-fraud reporting center and dispute resolution — are provided on the Korean version of this page.

📦 Instant premium estimate
Marine cargo can be quoted instantly on the KIDI reference rate + Meritz basis. Click "Instant Quote" at the top to see an estimate in about 30 seconds. Cargo group auto-matches from Chubb's official HS classification (1,391 items), with origin/destination auto-mapping to the transit zone.

Marine Cargo Insurance · comparison quote

Marine cargo cover for importers & exporters

We compare the wordings of 6 insurers and design cover that fits your trade terms for loss in sea/air transit.

6 insurers compared — AIG, Chubb and more, wordings and rates at once
New ICC(A/B/C) — choose coverage scope to match your trade terms
Warehouse to Warehouse — full origin-to-destination warehouse span
Instant quote, same-day certificate — online application, PDF certificate same day

Ask for a comparison quote on KakaoTalk →

Coverage, exclusions and limits are governed by each insurer's wording, and the final premium is confirmed after the insurer's underwriting review. Our fee is paid by the insurer, so there is no extra cost to you (Article 98 of the Insurance Business Act).