Marine Open Cover Policy
Open covers are commonly used in international trade. Either Exports or Imports related transits could be covered by this insurance on an annual basis. It is suitable for entities with regular overseas shipments and a huge volume of transactions. It provides automatic and continuous protection to shipments in the course of transit against the Perils incidental to a sea voyage, Air, and Land shipments.
Marine Open Cover is issued for overseas shipments only. Depending upon the nature of cargo, packing details, destination, and other factors, All Risk, Basic Risk, or Named Risk covers are given by the insurers through International Cargo Clauses (ICC – A/B/C).
It is similar to Marine Open policy in many aspects, only it is not a policy but an open cover in which terms are agreed and decided for all shipments within a specified period, usually 12 months. A Single Carrying Limit / Per Bottom Limit (PBL) is agreed upon. PBL is the maximum value of goods which is agreed to be transported at once. In other words, this is the maximum liability of the insurer for a particular consignment. In addition to this, a Per Location Limit (PLL) is also agreed which is for the accumulation of goods at one place during the course of transit. PLL is usually twice the PBL.
An amount equals to estimated premium for a certain sum insured is deposited with the insurer as an advance. Each and every shipment intended to be insured needs to be declared before the inception of the transit and a certificate of insurance is issued by the insurer by charging the premium at the agreed rate from the advance deposited with them. Despite having an Open Marine cover, a shipment is not insured unless the certificate of insurance is not issued by an insurer as per the agreed terms. Unutilized advance amount is refunded to the insured at the end of the period of cover.
Entities opt for this cover because it eliminates the need to negotiate terms of a new policy each time a shipment is made to/fro any international destination.
Coverage: There are basically 3 types of covers offered by insurers in marine (cargo) insurance policies, which are briefed below.
International Cargo Clause (ICC) A, B, and C – for Overseas Shipments
Inland Transit Clause (ITC) A, B, and C – for Inland Shipments
1-ICC / ITC - A - This is a form of All Risk insurance which is governed by exclusions, rather than coverage. So this cover offers indemnification against loss or damage to the subject whilst goods are in transit by every peril which has not been excluded in the policy. Some of the common exclusions in this cover are mentioned in
2-ICC / ITC - B - This cover is also known as Basic Cover in which only some named perils are covered. This cover offers indemnification against loss of or damage to the subject-matter insured, reasonably attributable to below perils.
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Fire or Explosion
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Vessel or craft being stranded grounded sunk or capsized
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Overturning or derailment of land conveyance
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Collision or contact of vessel craft or conveyance with any external object other than water
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Discharge of cargo at a port of distress - Earthquake, Volcanic Eruption or Lightning
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General Average Sacrifice
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Jettison or Washing Overboard
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The entry of Sea, Lake or River Water into the vessel, craft hold conveyance, container, lift van or place of storage,
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Total loss of any package lost overboard or dropped whilst loading on to, or unloading from, vessel or craft.
3-ICC / ITC - C - This cover offers indemnification against loss or damage to the subject whilst goods are in transit due to only a few named perils as mentioned below.
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Fire or Explosion
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Vessel or craft being stranded, grounded, sunk or capsized - Overturning or derailment of land conveyance
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Collision or contact of vessel craft or conveyance with any external object other than water
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Discharge of cargo at a port of distress
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General Average Sacrifice - Jettison
GENERAL EXCLUSIONS
General Exclusions Loss which are attributable to below reasons are excluded from the scope of marine (cargo) insurance policies
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Willful misconduct of assured
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Ordinary leakage/spillage port shortages , ordinary losses in weight or volume or ordinary wear and tear
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Insufficiency or unsuitability of packing or preparation of the subject matter insured.
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Inherent vice or nature of the subject matter insured.
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Delay
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Insolvency/financial default of carriers
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War, Strike, Riot and Civil Commotion
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Deliberate damage to or deliberate destruction of the subject matter insured
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Losses arising from nuclear weapons
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Losses arising from Moisture & ordinary trade losses
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Losses Due to overloading, Unsuitability of carrying conveyance and unseaworthyness of vessel
MAJOR EXTENSIONS AVALIABLE
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For Inland Transit: Strike, Riot and Civil Commotion
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For Overseas Transit: War, Strike, Riot and Civil Commotion Duty and Increased Value Insurance (for Imports only)
Why is Marine Insurance Important?
Marine insurance is a safe haven for shipping companies because it helps to reduce the financial loss due to possible loss of cargo. Marine insurance is very important because through marine insurance, ship owners and transporters can be sure of claiming damages especially considering the mode of transportation used.
Is Marine Insurance Mandatory?
Is marine insurance mandatory? Marine insurance is mandatory for all ship and yacht owners to obtain, especially where the vessel is to be used for commercial or transportation purposes and where it will be carrying passengers, workers, or cargo across international waters.
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Marine Open Cover Policy Features:
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Marine Open Cover Policy Claim:
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