Inherent vice is an exclusion found in most cargo insurance policies to account for a defect or inherent characteristic in the nature of the product.
As opposed to an external occurrence, such as a forklift puncturing a packaged item, inherent vice cannot be insured against damage or loss since the defect or characteristic is not visible to the carrier or insurer.
To determine if your good has a form of inherent vice, consider the following examples:
Short-Lived. Sealed plastic bottles can incur damage because of the pressure changes from climbing and descending through altitude, either when shipping by air or over land. This is due to an inherent quality of the bottle and explains why our water bottles tend to twist or bend out of normal shape when we are flying.
Structural Nature. The structural nature of an item with flawed design usually refers to its material. For example, the acidic chemicals in leather cause the item to tarnish or corrode when in contact with metal. This is unavoidable due to the inherent quality and nature of the product’s material.
History or Function. Iron and metals are known to rust or corrode when exposed to humidity. In the case of any machinery made of iron or metal, for example, a claim for rust would be denied if shipper doesn’t protect the equipment.
In the case of inherent vice, it is necessary for the shipper to know their product and ensure that it is packaged properly for the mode of transport or conditions that it may be exposed to along its journey. A claim may be denied either due to inherent vice or insufficient packaging, which are both coverage exclusions included in most cargo insurance policies.