What Is the Difference Between Open Cover and Specific Cover Marine Insurance?

A marine cargo policy provides coverage for loss or damage to goods while they are being transported by sea, air, rail or road. If you are a trader or in an import-export business, it is recommended that you have a marine cargo policy. Marine insurance can cover the losses caused by accidents and help your business operate in a stress-free environment.

The two types of marine insurance covered in India are open and specific marine insurance. In this article, we are going to learn the features of both types – Open vs specific marine insurance for your business. But first, let us learn more about Marine insurance in India.

Understanding Marine Insurance

Before discussing the differences between Specific Cover and Open Policy in marine insurance, let us understand what marine insurance can do for your business.

Marine insurance is also known as transit insurance in some regions of India. Marine cargo policy is designed to protect your business against losses or damages to ships, cargo, terminals, and any transport. It protects the goods that are transferred, acquired, or held between points of origin and final destination.

Open Cover in Marine Insurance

An open cover in marine insurance is nothing but an agreement between the insurance company and the policyholder. It ensures automatic coverage for all shipments falling within the scope defined by the agreement.

If your business performs frequent shipments, then this type of coverage is more suitable for your business. It saves time and effort in issuing a new policy for each consignment.

Key Features of Open Cover

Flexibility

Open covers are flexible and cover numerous shipments under a single agreement.

Automatic Coverage

Shipments are automatically covered without the need to declare each one individually.

Renewable

Did you know that Open covers are issued for a year and can be renewed based on mutual agreement?

Say, XYZ company ships electronics from India to clients in Europe and the USA. It sends 100-200 shipments every month. As they have a high frequency of shipments, they opt for an Open Cover agreement. This agreement ensures that all XYZ’s shipments are automatically insured under the same terms and conditions and lets the company operate without any stress.

Specific Cover in Marine Insurance

A Specific Cover, also known as a specific policy, is issued for a particular shipment. If your business occasionally gets a shipment requirement, specific marine insurance is an excellent option for you. It is tailored for businesses or individuals who need insurance coverage for individual shipments.

Key Features of Specific Cover

Single Shipment

Designed for single-transit risks, ideal for infrequent shippers.

Tailored Terms

The terms and conditions are specific to the particular shipment being insured.

Cost-Effectiveness

It can be more cost-effective for occasional shipments as you only pay for the coverage when you need it.

A company called ABC is a small business that produces custom ceramic pieces. It receives an order to ship a one-time, large batch of pottery to a boutique in Australia. They opt for a specific cover policy to cover the specific journey.

Open vs. Specific Marine Insurance

The choice between specific cover and open cover in marine insurance depends largely on the nature of the business and the frequency of shipments.

Frequency of Shipments

If your business sends regular shipments, you should opt for an Open Cover insurance policy.  But, if your business does not need to send frequent shipments, you should opt for a specific cover to save on premiums. Selecting the right cover should be economical and convenient for your business. Contact a professional to help you with selecting the right cover. You can contact an agent of a renowned insurance company like TATA AIG.

Coverage Scope

Open Cover offers a broader scope, making it easier for businesses to manage their insurance needs under one agreement.

Administration

Specific Cover requires more administrative work per shipment, which can be a drawback for businesses without the dedicated resources to manage these tasks.

Conclusion

If you wish to choose the right type of marine insurance cover for your business, you must focus on the unique requirements of your industry and your company. It is recommended to analyse your business’s operational activities and risk exposure to ensure maximum protection for your cargo. Whether you opt for an Open Cover or a Specific Cover marine cargo policy, make sure you align the coverage with your business needs.

You can consult with a knowledgeable insurance broker or agent who can provide invaluable guidance in making the best choice for your business.