Archive / Investment Adviser (Level 2) / Non-Life Insurance Products
nism-series-xb-inherent-vice-exclusion-marine-cargo-insurance[ INVESTMENT ADVISER (LEVEL 2) ]
In Marine Cargo Insurance (Institute Cargo Clauses), why is loss arising from 'Inherent Vice' (natural deterioration, rusting, or perishable decay of goods) an absolute statutory exclusion?
[ A ]Because marine cargo insurance covers only passenger cruise luggage.
[ B ]Because inherent vice is a natural physical certainty arising from the nature of the cargo itself rather than a fortuitous, accidental external peril of the sea.[ CORRECT ]
[ C ]Because ships are not allowed to carry fruit.
[ D ]Because marine cargo policies are issued by agricultural post offices.
Takeaway
The correct answer is B: inherent vice is excluded because it is a natural, inevitable characteristic of the cargo itself rather than a fortuitous external peril of the sea.
Derivation
Marine cargo cover under the Institute Cargo Clauses indemnifies fortuitous, accidental perils of the sea -- collision, fire, jettison, theft -- events extraneous to the goods. Inherent vice (rust on steel, fruit ripening and rotting, grain self-heating) is a certainty built into the commodity's own nature; given enough time it happens regardless of how carefully the cargo is stowed. Because there is no element of fortuity, the loss fails the basic insurable-risk test, so ICC Clause 4.4 lists it as an absolute exclusion -- testing whether candidates can separate 'peril of the sea' from 'peril inherent in the subject-matter insured.'
Why the others fail
A — Because marine cargo insurance covers only passenger cruise luggage.
Marine cargo insurance covers international goods shipments generally, not just passenger cruise luggage; this mischaracterizes the entire product's scope.
C — Because ships are not allowed to carry fruit.
Irrelevant and factually false; shipping restrictions on fruit have no bearing on why inherent vice is excluded under the ICC clauses.
D — Because marine cargo policies are issued by agricultural post offices.
Confuses transport logistics (reefer/temperature-controlled cargo arrangements) with the legal rationale for the exclusion; the two are unrelated.
Related questions
nism-series-xb-health-top-up-multiple-claims-out-of-pocketInvestment Adviser (Level 2)
Why a Regular Top-Up Policy Fails Across Multiple Small Claimsnism-series-xb-super-top-up-versus-regular-top-up-multiple-claimsInvestment Adviser (Level 2)
Super Top-Up vs Regular Top-Up When Multiple Hospitalizations Occurnism-series-xb-parking-funds-short-term-goal-liquidityInvestment Adviser (Level 2)
Where to Park Fixed Deposit Proceeds Due Out Within a Month