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 future. This means Open marine insurance policy is an agreement between the insurance provider and the policyholder to provide cover for goods which are being transported for the agreed period or for indefinitely until the agreement is being canceled by either of the parties.
Open cover marine policy
- An open cover marine insurance is mainly designed to meet the requirements of those firms which have substantial transactions related to export and import. So, by an open cover marine policy, these firms will not have to make insurance agreements every time a transaction is being done; rather several transactions within a specific period are covered.
- In an open cover insurance policy, the agreement which is made between the insurance provider and the insured is 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 which have been agreed upon.
- The tenure for which an open cover marine policy is valid is for 12 months.
- This insurance policy can be canceled by giving a written notice before 30 days.
- This is not a contract that would be enforced; rather, in this agreement the insurance provider would honour and accept the declarations made for ships, cargoes.
- Mainly, open cover insurance is subjected 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 Marine insurance policy
- An open policy can also be referred to as “Floating Policy” which provides benefits to the clients by 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 can reduce slowly by the amount of each declaration until the sum insured is finally exhausted.
- 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 the policy has ceased.
- An open policy can be canceled by giving written notice before 15 days of cancellation.
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 business thus preventing them from purchasing a new policy every single time when a shipment is done.