The open cover is a type of marine insurance policy in which the insurer agrees to provide coverage for all cargo shipped during the policy period. Open cover insurance is most commonly purchased by companies that make frequent shipments, as the blanket coverage keeps them from having to purchase a new policy each time a shipment is made.
The permanent policy covers all voyages under that time period without having to negotiate a contract for each shipment. It is a form of blanket coverage that only requires certain details to be notified before embarking on the voyage.
Since the insured is agreeing to purchase a longer-term contract, it may be able to realize lower premiums because the insurer does not have to spend time on administrative activities and the insurer benefits from having a guaranteed premium over a longer period of time. Premiums are typically paid upon declaration of a voyage, for example, weekly or monthly.
A variety of risks can be covered but the most common and widest are the Institute Cargo Clauses (A) which cover loss or damage to goods on an All Risks basis, but which are subject to certain standard exclusions.
In addition, War Risks (while onboard a seagoing vessel or an aircraft) and physical risks of loss or damage as a result of Strikes, Riots, and Civil Commotions may be insured. The War and Strikes risks are rated from an agreed scale to which all insurers are bound.
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