Marine Insurance and Classification
Marine insurance is a type of insurance policy offering coverage for any loss or damage caused to goods/cargo, vessels, terminals, and goods in transit from one place to another.
With multiple marine insurance options available, choosing the right one that suits your business needs is essential. Marine Open Cover and Marine Open Policy are two main types of marine insurance available.
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What is a Marine Open Cover?
A marine open cover is a type of marine insurance policy wherein the insurer offers to insure all the goods/cargo to be shipped during the policy term. This cover is usually bought by companies that make regular shipments. This takes away the additional effort of purchasing a new policy each time the shipment is made. Thus, it helps in providing blanket coverage to the shipments.
Marine shipping involves high risks and uncertainties. A marine open cover is typically used for international trade and by firms that frequently deal with high-volume trade over long periods. This type of policy can either be a renewable policy or a permanent policy.
What is a Marine Open Policy?
A marine open policy is a marine insurance policy that covers multiple shipments for a period of 12 months, depending on the sum insured. The sum insured is adequately large, and adjustments are made as per the reducing balance method against the value of each cargo. A marine open policy is opted by traders needing to dispatch cargo frequently over a stipulated period.
In a marine open policy, as per the thumb rule, the sum insured needs to be at least four times the limit per sending or single carrying limit. Also, the premium is always paid in advance as per the projected sum insured.
Since the sum insured as per the marine open policy is adjusted, this adjustment of the sum insured and the premium are done on basis of the submission of each voyage declaration. There is also an option to improve the sum insured up to four times a year.
In case of any genuine omission or faulty declarations, corrections are permissible after proper inspection. After the policy expires, a refund is allowed on the premium on the unadjusted sum insured.
Conclusion
To sum it up, a marine open policy can thus cover multiple requirements for your business. In contrast, a marine open cover policy helps you enjoy a single blanket coverage for continuous business without having to buy a new policy for every shipment.
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