Cargo Insurance for Pakistani Exporters: All-Risk vs Basic Cover
Institute Cargo Clauses A, B and C compared for Pakistan exports: what each covers, the exclusions that decide claims, how much to insure, and when cover must start.
Most exporters only read their cargo insurance after something goes wrong. By then the questions that decide the claim — which clauses, what value, when cover started, how the goods were packed — were settled weeks earlier. This guide explains the standard cover options and the choices Pakistani exporters should make before the container leaves the factory.
The Standard Clauses
Most marine cargo policies are written on the Institute Cargo Clauses (ICC):
| Clause | Type of cover | In plain terms |
|---|---|---|
| ICC (A) | "All risks", subject to exclusions | Covers physical loss or damage from any external cause unless excluded |
| ICC (B) | Named perils | Covers listed events such as fire, stranding, collision, jettison, and water entering the container or vessel |
| ICC (C) | Named perils, narrower | Covers major casualties such as fire, stranding, sinking, collision, and jettison — not water damage or theft |
War and strikes risks are usually added through separate clauses. Ask whether they are included.
Exclusions That Decide Claims
Even all-risks cover has exclusions. The ones that matter most for Pakistani exports are:
- Insufficient packing: damage caused by packing that was not fit for the journey
- Inherent vice: damage from the nature of the goods, such as natural moisture loss or some types of mould
- Delay: loss of market or late delivery penalties are not cargo damage
- Ordinary leakage, loss in weight, and wear and tear
- Wilful misconduct of the insured
This is why packing standards, moisture control, and stuffing photos are not paperwork for its own sake — they are the evidence an insurer looks at first.
How Much to Insure
The common practice is to insure the CIF value plus 10%, which covers freight, insurance, and part of the expected margin. Incoterms set minimums when the seller buys insurance for the buyer:
- CIF: the seller must provide at least ICC (C) cover for 110% of the contract value
- CIP: the seller must provide ICC (A) cover for 110% of the contract value under Incoterms 2020
A buyer who expects all-risks cover under a CIF sale should say so in the contract — the minimum is narrower.
When Cover Starts
Check that cover begins where your risk begins. Under FOB, CFR, and CIF, risk passes on loading at the port, but an exporter still carries the risk of the road leg from Faisalabad or Sialkot to Karachi. A policy that starts only at the port leaves that leg uninsured. Warehouse-to-warehouse cover, or a separate inland transit policy, closes the gap.
Worked example — the inland gap: A Lahore exporter sold FOB and assumed the buyer's insurance covered everything. The truck carrying the container overturned on the way to Karachi. The buyer's policy only started at loading, and the exporter had no inland cover. A warehouse-to-warehouse policy would have responded.
Worked example — basic cover on garments: A garment exporter bought ICC (C) to save premium. Seawater entered a container through a damaged door seal, soaking several cartons. Water entry is not covered under (C), so the claim was declined. ICC (A) or (B) would have covered it.
General Average
When a ship is in danger and the master sacrifices cargo or incurs extraordinary costs to save the voyage, all cargo owners share the cost under general average — even if their own cargo is undamaged. Insured cargo owners have the insurer provide the guarantee. Uninsured owners must post security themselves before their cargo is released, which can take weeks.
Making a Claim
- Note visible damage on the delivery receipt before signing.
- Notify the insurer and the carrier promptly; carrier notice periods can be short.
- Keep damaged goods and packing until the surveyor has inspected them.
- Collect the B/L, invoice, packing list, stuffing photos, survey report, and correspondence.
- Submit the claim with the policy or certificate and evidence of value.
Single Certificates or an Open Cover
Exporters shipping often usually arrange an annual open cover, under which each shipment is declared and a certificate issued. It avoids gaps from late certificates and gives consistent terms. Occasional shippers can buy single-shipment cover — but it must be in place before the risk starts.
How MTX Helps
MTX is not an insurer, but we help exporters line up the logistics side of a claim-ready file: stuffing photos, seal records, VGM, and on-board dates. Speak to your insurer or broker about the clauses, and to us about the evidence each shipment should carry.
Need this handled on a live shipment?
Share origin, destination, cargo type, and target dates — our operations team will respond with a practical booking path, not a brochure.