Skip to content
←Back to glossaryInsurance

Inherent vice

Exclusion for damage caused by the instability or natural deterioration of the object itself, rather than by an external accidental cause.

Definition

Inherent vice is a property's tendency to deteriorate because of what it is made of: a material that cracks, a pigment that shifts color, a support that warps, an old textile that grows brittle. Policies exclude it because insurers cover accidents rather than aging; otherwise they would be paying for routine conservation instead of a fortuitous loss. The exclusion is sound in principle but bites hardest on the oldest objects, since it takes out of cover exactly what is most likely to happen to them. To tell natural deterioration from damage made worse in transit, you need to know the object's exact condition before it left. Hence the weight given to joint condition reports.

Its 4 cross-references, woven across the glossary's 18 categories
Inherent vice: Insurance glossary illustration, AlgoPolis
Example

Textbook case: inherent vice comes up again whenever very high-value fragile objects are lent. The government indemnity program sometimes reads the exclusion more favorably to secure prestigious loans.

Read next
Put it to work
Related terms
Go further at the Academy
Stay informed

Follow the research

One letter a week. First, the week's underwriting note, when one is published: a dated, argued decision, signed by Paul Bernardski. Then what the observatory published on cyber risk, political risk and insurance. No account, no tracking.

No spam, one-click unsubscribe, no data ever sold.