Inherent Vice

Summary of Inherent Vice

A latent defect in a product that causes damage to it, renders it useless, or otherwise inflicts an economic loss that is limited to the item itself. Insurance policies do not respond for losses attributable to inherent vice.

(Main Author: William J. Miller)

Inherent Vice in International Trade

Meaning of Inherent Vice, according to the Dictionary of International Trade (Global Negotiator): Damage to goods which one can foresee is bound to occur during any normal transit, and which arises solely because of the nature or condition of the goods shipped. Such damage is said to arise from “inherent vice” which may be defined as an internal cause rather than an external cause of damage. Exclusion of insurance coverage for inherent vice is implied in every cargo policy. This type of exclusion is reinforced by the words “from any external causes” and the “all risks” coverage. The word “risk” itself implies that only fortuitous losses are intended to be covered. Insurance protects against hazards, not certainties.