A food importer receives a shipment of specialty olive oil from Spain. During transit, the cargo is damaged when condensation inside the container causes the product labels to degrade, the packaging to weaken, and a portion of the bottles to crack under shifting pressure. The importer files a claim. The insurer denies it.
Why? Because the policy was a named peril policy, and “condensation damage” was not one of the listed perils. The loss was real. The financial impact was real. But without an explicit entry in the policy’s covered causes list, there was no recovery.
This scenario is more common than food importers realize, and it is almost always a surprise. Most shippers assume that having a marine cargo policy means having meaningful protection. The gap between that assumption and reality is where the named peril versus all-risk distinction lives.
What Named Peril and All-Risk Actually Mean
The difference between these two policy types comes down to a single question: does coverage start from a positive list, or does it start from a negative one?
Named peril policies cover only the specific risks written into the policy. Fire, theft, collision, sinking, stranding, and jettison are common examples. If a loss occurs and the cause is not on that list, the claim is denied. The burden falls on the policyholder to prove that the cause of loss matches a listed peril.
All-risk policies work in the opposite direction. They cover physical loss or damage from any external cause, unless a specific exclusion applies. The burden of proof shifts: the insurer must show that the loss falls within a named exclusion to deny it. This is a meaningfully higher bar to clear.
For food shippers, that distinction matters enormously. Perishable goods are vulnerable to a wide range of causes that would not appear on a named peril list: temperature fluctuations from delayed customs clearance, contamination from adjacent cargo, humidity-related spoilage, and pressure damage during rough seas. All-risk coverage extends protection to these scenarios. Named peril coverage, in most cases, does not.
The Institute Cargo Clauses: A, B, and C
Most ocean cargo insurance is written using standardized forms known as the Institute Cargo Clauses, published by the Lloyd’s Market Association. There are three versions, and understanding them helps clarify where named peril and all-risk coverage actually show up in practice.
Institute Cargo Clauses (C) is the most restrictive form. It covers a short list of major perils: fire or explosion, vessel stranding or grounding, collision, discharge of cargo at a port of distress, and general average sacrifice. Very little else. For food products, Clauses C provides limited protection at best.
Institute Cargo Clauses (B) adds several more covered perils to the Clauses C list, including earthquake, volcanic activity, lightning, washing overboard, and water entry into the vessel or container. It is still a named peril structure, but broader than Clauses C.
Institute Cargo Clauses (A) is the all-risk form. It covers all risks of loss or damage to cargo from external causes, subject to specific exclusions. For food shippers, Clauses A is the standard to target.
The practical takeaway: if your policy is written on Clauses B or C, or on a comparable domestic named peril form, you are not operating with all-risk coverage, regardless of how the policy was described to you.
Why All-Risk Coverage Is the Right Baseline for Food Cargo
The food supply chain creates a specific risk profile that named peril policies are not designed to handle well. Consider the categories of loss that routinely affect food shippers in transit.
Temperature and spoilage claims. A named peril policy may cover refrigeration breakdown if that peril is explicitly listed, but many do not include it. Spoilage resulting from delays at customs, port congestion, or late vessel connections is rarely a named peril. Under an all-risk policy, these losses are covered unless a specific exclusion applies.
Contamination without direct contact. As covered in our earlier piece on LCL cargo insurance, consolidated shipments regularly expose food products to odor absorption and airborne contamination from adjacent cargo. This type of loss is almost never a listed peril. All-risk coverage is the only structure that can respond to it.
Water and humidity damage. Condensation inside containers, moisture infiltration during port handling, and humidity-related degradation of packaging or product integrity are common in food shipments. They rarely appear on named peril lists but are covered under Clauses A policies absent a specific exclusion.
Handling damage during multiple transfers. Dropped pallets, forklift punctures, and crushing damage during loading and unloading can fall outside named peril lists depending on how narrowly the policy is written. All-risk coverage addresses these without needing to categorize the cause.
The food industry’s core risk is that a relatively minor incident, condensation, a brief temperature deviation, proximity to incompatible cargo, can render a product unsaleable even when there is no obvious physical destruction. Named peril policies are built around obvious, catastrophic perils. All-risk policies cover the full range of ways a food shipment can become a loss.
How Food Shippers End Up With Named Peril Coverage Without Realizing It
The most common reason food shippers carry named peril coverage is that they never specifically asked for all-risk, and the cheaper or default option was placed without the distinction being explained.
Freight Forwarder-Arranged Coverage
Many food importers and exporters rely on coverage arranged by their freight forwarder rather than obtaining a standalone policy. Freight forwarder cargo insurance often defaults to a Clauses B or Clauses C structure, either because it is less expensive or because it is what the forwarder’s master policy provides. Shippers frequently do not know this until a claim is denied.
Open Cargo Policies with Named Peril Defaults
An open cargo policy, which provides automatic coverage for all shipments moving under a single policy, can be written on either an all-risk or named peril basis. The fact that a policy is open does not mean it is all-risk. Some open cargo policies are written on Clauses B or on domestic named peril equivalents. Verifying which form applies to your open policy is essential.
Broker Placement without Food-Specific Review
General commercial insurance brokers who do not specialize in food industry logistics may not understand the distinction between Clauses A, B, and C in the context of perishable cargo. A policy placed in good faith by a non-specialist may be technically appropriate for industrial goods but materially inadequate for food products.
This is not necessarily anyone’s fault, but it is a gap worth closing.
Cost-Driven Policy Selection
Named peril policies are less expensive than all-risk policies because they cover less. In a competitive bidding process where premiums are compared without adequate attention to coverage scope, named peril policies can win on price alone, and the difference only becomes visible at claim time.
Four Questions to Ask About Your Current Policy
You do not need to read every page of your cargo policy to get a quick read on whether your coverage is structured correctly for food. These four questions will take you most of the way.
1. Which Institute Cargo Clauses form does my policy use? Ask your broker directly. If the answer is Clauses B or Clauses C, you are on a named peril form. If the answer is Clauses A, or an equivalent all-risk form, your coverage structure is correct.
2. Is spoilage and temperature excursion damage explicitly addressed? All-risk coverage is broader, but spoilage can still be excluded under an inherent vice provision or a refrigeration exclusion. Confirm that your policy responds to temperature-related losses and understand what documentation is required to support a claim.
3. Does the policy cover contamination without direct physical contact? Odor absorption, airborne contamination, and proximity-related loss are common in food transit. Verify that the policy language addresses these scenarios and does not require direct physical contact as a condition of coverage.
4. Are there sub-limits or exclusions specific to my product category? Premium spirits, fresh produce, seafood, and certain specialty ingredients often attract specific exclusions or sub-limits even on all-risk policies. Understand what applies to your actual cargo, not just to cargo in general.
For a broader view of how marine cargo insurance functions as a protective structure for food industry shipments, Coughlin’s ocean cargo and stock throughput coverage page outlines the key coverage types and how they work together.
A Policy Worth Actually Reading Before a Claim
Most food importers and exporters do not find out that their marine cargo policy is a named peril policy until a claim is denied. At that point, the options are limited to disputing the denial or absorbing the loss.
The better time to have this conversation is now, before a shipment is compromised and before you are in a position where coverage questions are being answered under pressure.
At Coughlin Insurance Services, we work specifically with food industry clients who move product through domestic and international supply chains. We know where the gaps appear in cargo policies, understand the difference between what a policy says and what it actually covers in practice, and can give you a clear read on whether your current coverage reflects the risk profile of your business.
If you are not certain whether your marine cargo policy is all-risk or named peril, or if it has been a while since anyone reviewed the specific terms against your actual cargo, we would be glad to take a look. Contact us to start that conversation.