Marine Open Policy

What is Marine Open Policy?

A marine open policy is akin to a specialized insurance plan for businesses that frequently ship goods via the sea. Rather than obtaining insurance for each separate shipment, businesses can acquire coverage for an entire year based on the total value of all their shipments. As cargo is dispatched, the insurance amount gradually diminishes, but the starting coverage amount is typically substantial. Thus, businesses that need to send items consistently over a span of time often opt for a marine open policy as a way to simplify and economize.

By general convention, the sum insured under a marine open policy should be no less than four times the limit per shipment or the single carrying limit. The premium is customarily paid upfront, reflecting the projected sum insured. Adjustments to the policy's insured sum mean that both the premium and the insured sum shift in line with the submission of each individual voyage declaration. After meticulous examination, modifications are sanctioned in cases of genuine oversights or incorrect declarations. Any premium on the unadjusted insured sum may be returned once the contract comes to an end.

Much like its counterparts, a marine open policy safeguards against a myriad of risks faced by cargo during its journey. The most common causes for cargo damage or loss during transit include explosions, fires, hijackings, collisions, mishaps, and overturning.

Features of Marine Open Policy:

Covers loss or damage of cargo across multiple transits.
The insurance policy remains valid until it's either canceled or the insured sum is fully utilized, with the former scenario occurring first.
This policy is available in three variants: within the country (inland), from India to a foreign country (export), and vice versa (import).
Tailored for businesses that dispatch shipments on a regular basis.
Owing to its comprehensive coverage, the premium typically leans towards the higher end of the spectrum.
Payment of the premium is expected in advance by the buyer.
The insured sum should be equivalent to four times the individual carrying limit or base limit.
It's imperative for the insured party to declare every shipment in line with the policy's stipulations, with no exceptions.
Both the premium and the insured sum undergo alterations in sync with each individual declaration.
The marine open policy permits up to four augmentations to the insured sum within a year.

Why do you need Marine Open Policy?
For businesses that have regular shipping operations, a marine open policy emerges as a prudent choice. Characteristically, this insurance provision is an annual directive, encompassing a singular insured sum. Numerous consignments are included under its umbrella until the entire insured amount is depleted. The essence of an open policy is the luxury it provides to the policyholder by eliminating the need to secure distinct insurance covers for individual consignments or journeys. If your business undertakes a considerable number of analogous transactions within a year, then an open policy would be markedly beneficial.

Adopting a marine open policy can infuse a sense of tranquillity, knowing that your goods stand shielded against potential transit-related losses or damages. By embracing this protective measure, entities like shipping corporations and courier services can fortify themselves against potential financial setbacks stemming from diverse incidents. These can range from natural calamities, international border disputes, complications linked with waterborne or overland transportation, challenges during aerial conveyance, or even simple mishandling of freight. This policy operates as a reparation agreement, compensating for property damages invoked by certain specified hazards, within the confines of the policy's boundaries. A plethora of commodities and cargo fall under this insurance's purview, allowing you the flexibility to customize the coverage to resonate with your distinct business requisites.

What will Marine Open Policy cover?

The coverages offered by a marine open policy can be delineated as follows:

All Risks as per ITC (A) & ICC (A)

These policies are designed to offer extensive coverage against a myriad of risks, detailed by the Institute Cargo Clauses (A) and the Indian Trade Clauses (A). The "All Risks" provision encompasses protection against physical damage or loss of the insured items, unless there's a specific exclusion mentioned in the policy terms. Thus, the policy accounts for numerous incidents, including but not limited to collisions, transport vehicle overturns, piracy, fire, and mishandling-induced damage. This ensures a thorough safety net, capturing unforeseen and unplanned incidents.

War and SRCC (Strikes, Riots, and Civil Commotion) Risks in Import and Export

These policies provide coverage for goods susceptible to damages or losses due to war-related events, such as hostile actions, sabotage acts, and analogous occurrences. Moreover, they cater to disruptions stemming from strikes, riots, civil unrest, and disturbances related to labor that might impede the seamless transit of goods.

Reconditioning Cost

Should there be a covered loss or damage, this coverage remunerates the carrier for the expenditures incurred during the reparation or restoration to the original condition. It might comprise machinery repairs, equipment mending, replacement of lost or impaired items, labor charges, material costs for reconditioning, and other related expenses, including shipping and storage.

Natural Calamities

This coverage offers protection against losses or damages to cargo due to natural disasters, such as hurricanes, storms, earthquakes, or tsunamis.

Explosion

Should there be an explosion or a related incident, this coverage ensures protection for your consignment and any other property or cargo on board. It also covers salvage and recovery expenses stemming from the explosion and liabilities related to damages to other carriers and properties.

SRCC for Inland Transit

This policy thoroughly covers the adversities linked to inland transit, incorporating potential interruptions caused by strikes, riots, civil unrest, and similar events. The SRCC coverage guarantees financial safeguarding for businesses against potential damages or losses to their commodities due to such unpredictable incidents, regardless of the mode of inland transit, be it by road, rail, or other methods.

Theft, Pilferage & Non-Delivery (TNPD) in Basic Cover

These policies grant primary coverage against specific perils that might arise during the intricate transit of goods from their origin to the final destination. The coverage ensures businesses receive compensation for commodities that are stolen, pilfered, or not delivered to their designated endpoint.

What's not covered?

Outlined below are prevalent exclusions usually present in a marine open policy in India:

Normal Wear & Tear, Volume & Weight Loss, Liquid Leakage

Damages or losses arising from volume reduction, weight decrease, liquid spills, or ordinary wear and tear aren't covered for the insured commodities.

Intentional or Willful Activities by the Insured

The policy does not account for damages or losses incurred due to intentional or deliberate actions by the insured or their representatives, like deliberately damaging their own consignment.

Inadequate Packaging

The policy doesn't cover losses stemming from the insured's negligence or their failure to take prudent measures while packaging or prepping the insured commodity for dispatch.

Inherent Nature

Damages or losses that originate from the inherent attributes or defects of the insured item are not included.

Default in Financial Commitments

This coverage exclusion relates to damages or losses resulting from a business's inability to meet its financial obligations, such as loan defaults. This exclusion often comes into play when an entity, like a goods forwarder, cannot fulfill their contractual duties in delivering or transporting commodities due to monetary constraints.

Who needs Marine Open Policy?

A marine open policy is versatile, offering distinct advantages to a broad spectrum of industries. It holds particular significance for businesses that consistently ship cargo throughout the calendar year. The following are illustrations of entities that could greatly benefit from such a policy:

Small and medium-sized enterprises (SMEs)
Importers and exporters with regular shipment schedules
Establishments frequently transporting cargo of high intrinsic value
Freight forwarding entities and logistical organizations
A gamut of professionals and entities including merchants, contractors, financial institutions, procurement agents, maritime enterprises, and more.

FAQs

What distinguishes a marine open policy from a stop policy?

The primary distinction between a marine open policy and a marine sales turnover policy (STOP) lies in their coverage scope. A marine open policy is concerned with the value of the transported items. Conversely, a STOP policy zeroes in on an enterprise's sales revenue.

What does a marine open cover policy entail?

A marine open cover provides insurance for all commodities and shipments that are dispatched during the policy's active period. It ensures that these shipments are shielded comprehensively. Such a policy could either be a perpetually valid one or subject to periodic renewals.

Do marine insurance policies come with a surrender value?

Conventionally, marine insurance policies don't offer a surrender value. The term "surrender value" is more prevalent in the realm of life insurance schemes, like whole life or endowment plans. In these, the insured can avail a specified sum if they opt to discontinue or relinquish the policy prior to its culmination. Marine insurance primarily focuses on offering protection to goods or shipments from assorted threats and dangers while in transit.

How is the "per sending limit" in marine insurance defined?

The "per sending limit" signifies the utmost liability the insurance firm agrees to for the insured's possessions dispatched in one consignment. Depending on the policy's specifics, there could be a universal limit for all transport means or individual limits set for each transportation method.

Who is eligible to procure marine open inland transit insurance?

Any individual or enterprise involved in shipping commodities and undertaking numerous consignments annually can avail this insurance. It is tailored to shield the transported items from potential damages or losses.