What is an Open Policy?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 19 September 2019
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An open policy is a form of cargo insurance policy that is used to cover all types of shipments undertaken by the insured party. Sometimes referred to as blanket coverage, the client is covered for any situation specified in the terms and conditions of the insurance agreement, as long as those shipments have been properly declared to the company that underwrites the policy. While somewhat expensive, the protection that is provided by an open policy can often necessary when goods are shipped between countries, and in some cases is necessary to comply with regulations put in place by the jurisdiction where the shipper does business.

With an open policy, it is important for the insured party to specify the mode of shipment that is used, as well as the locations where shipments will take place. This helps the insurance provider to determine the geographical trade area that will be covered under the terms of the policy, as well as the modes of transportation that must be addressed. Many businesses that routinely ship goods via different means, including over land, air transport, or water transportation, attempt to secure a policy that has the broadest coverage, even if they currently do not make use of all the different modes of transportation on a regular basis.


In some countries, exports cannot leave a port until a document that is known as a marine insurance certificate is completed and submitted to proper government authorities. Part of the provisions of this document include presenting proof of insurance coverage for the goods that are being shipped out of the country. When this is the case, having open policy coverage with a provider that is recognized and accepted by the authorities can help minimize the chances of delaying the shipment, which in turn helps the goods to arrive in a more timely manner.

As with any type of insurance coverage, an open policy is only considered to be in effect as long as the insured party is current with the premium payments. Should the client fall behind in the premiums, some insurers do allow a short grace period, usually between ten and thirty days, to pay the outstanding premiums before canceling the coverage. Different providers have various solutions in the event that the client files a claim during this grace period, and before the premiums are brought current. Often, those solutions are based on regulations in the country of origin that must be complied with in order to have the privilege of selling insurance in the area.


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