The open cover is a category of marine insurance policy in which the insurance provider will provide coverage for all the cargoes shipped during a specific policy period. The open cover is most commonly procured by those companies which make very frequent shipments. This policy can act as a blanket cover for businesses thus helping them to avoid purchasing a marine insurance policy every time a shipment is made.
An open marine insurance cover is mainly a contract for 12 months which helps in giving the insured a sense of continuous protection covering a large number of shipments. The premium for this open cover marine insurance is maintained by the cash deposit account maintained by the insured person. The policy does not have any specific sum insured but can be issued by the SCL or PBL along with the terms and conditions of the cover. “Limit of liability” is one of the major agreed conditions under the open cover marine insurance wherein the insurance provider is only liable for the shipments for a sum that does not exceed this agreed limit.
Open cover marine insurance features
Some of the important open cover marine insurance features are mentioned below.
- Through purchase of an open marine insurance cover, a business’ frequent shipments can be easily covered under an individual insurance policy rather than purchasing an individual policy for each shipment.
- Here the insured entity has to maintain sufficient balance in a cash deposit account. This would ensure coverage for each shipment that the insurance provider is duly intimated in advance, even if they send the policy certificate at a later date.
- According to the terms of the marine insurance, the insured person must declare every shipment which is coming under the scope of the agreement.
- The insurance provider should accept the insurance of all the shipments made during the period by the insured, who has sufficient balance in the cash deposit account.
Additional Read: What is Open Marine Insurance Policy?
Open marine insurance coverages
Open cover marine insurance policy can be used for providing cover against risks like fire, sinking, explosion, earthquake, and other natural perils. The premium of this insurance would depend on the proposed terms of the coverage provided i.e. the basic cover provided would be cheaper than all risk cover.
On the payment of additional premium, the below-mentioned shipments can also be covered by an open cover marine insurance policy.
- Inland transit
- Import and Export
- In the case of basic cover only, cover is provided against theft, pilferage, and non-delivery of goods.
- Additional cover for storage before the cargo is delivered at the final destination.
However, there are certain exclusions associated with the open cover marine insurance policy such as:
- Ordinary wear and tear of the shipment
- Ordinary loss in the weight of the shipment
- Misconduct by the insured if done willfully
- Insolvency of carrier
- Any ordinary leakage in the liquid cargo
Additional Read: What is not covered Under Marine Insurance?
Hence, in case of open cover in marine insurance, there is no limit on the total number or the value of shipments which can be covered thus, becoming a promise for safeguarding the future shipments whose details are unknown and not specified.