Marine Insurance Policy Categories
The open cover is a category of marine insurance policy in which the insurance provider is ready to provide cover for all the cargoes which are being shipped during the policy term whereas an open marine insurance policy will provide cover for an indefinite number of requirements arising in the future.
An open marine insurance policy provides coverage for goods through an agreement between the insurer and the policyholder. Transported for the agreed period or for indefinitely until cancel the agreement by either of the parties.
Open-cover
- An open cover marine insurance, designed mainly to meet the requirements of those firms which have substantial transactions related to export and import. So, by an open cover policy, these firms will not have to make insurance agreements every time when making a transaction; rather cover several transactions within a specific period.
- In an open cover insurance policy, the insurance provider and the insured make an agreement about the goods insured, the risks covered, the packing conditions, the voyages, rates of the cover, etc. The insured can claim insurance cover within these conditions that they agreed upon.
- The tenure for this policy is valid for 12 months.
- Can cancel this insurance policy by giving a written notice before 30 days.
- This is not a contract that would enforce; rather, in this agreement, the insurance provider would honor and accept the declarations made for ships, cargoes.
- Mainly, open cover insurance can be subject to two major limitation clauses i.e. “Per Bottom” and “Per location”. By these clauses, the liability of the insurance providers becomes limited only up to the agreed amount. So, in case if there happens to be an accident and the losses are more than the agreed amount then the loss would be partially recoverable by the insurance provider i.e. up to the agreed amount.
Open policy
- An open policy can also refer to as “Floating Policy” which provides benefits to the clients with the help of considerable turnover and several dispatches.
- The open marine insurance policy is usually for an agreed amount against which several declared consignments will be dispatched. Due to this, the sum insured reduces slowly by the amount of each declaration until the sum insured, exhausted finally.
- The open policy is an enforceable contract and so it is duly stamped.
- The open policy will cease after 1 year from its date of issue. However, the sum insured is important and may exhaust before or even after ceased the policy.
- Can cancel an open policy by giving written notice before 15 days of cancellation.
Difference between Open cover & Open Marine insurance policy
An Open Cover & an Open Marine Insurance Policy are both types of marine insurance policies. The primary difference between them is the level of coverage provided.
This marine cover plan is a contractual agreement between the insurer and the policyholder to provide coverage for all shipments made by the policyholder during a specified period. This type of policy is suitable for businesses with frequent shipments, as it eliminates the need for multiple policies and simplifies the insurance process.
On the other hand, an Open Marine Insurance Policy provides coverage for individual shipments. The policyholder must purchase a new policy for each shipment, and the coverage is limited to that shipment only. This type of policy is suitable for businesses with infrequent shipments or for individuals who require one-time coverage.
In summary, the Open Cover Marine insurance offers broader coverage for all shipments made during a specified period, while an Open Marine Insurance Policy provides coverage for individual shipments.
Additional Read: What is Open Marine Insurance Policy?
Hence, an open policy would intend to cover an indefinite number of requirements in the future. Whereas an open cover insurance policy can act as blanket coverage for those companies which have frequent businesses. Thus preventing them from purchasing a new policy every single time when doing a shipment.
About The Author
Simran
MBA Insurance and Risk
With extensive experience in the insurance industry, Simran is a seasoned writer specializing in articles on marine insurance for SecureNow. Drawing from 5 years of expertise in the field, she possesses a comprehensive understanding of the complexities and nuances of marine insurance policies. Her articles offer valuable insights into various aspects of marine insurance, including cargo protection, hull insurance, and liability coverage for marine-related risks. Renowned for their insightful analysis and informative content, Simran is committed to providing readers with actionable information that helps them navigate the intricacies of marine insurance with confidence.
