Illustration credit: WCA
Two types of insurance
1. Open or annual cover
Open or annual cover is the most common form of freight protection used by regular importers and exporters, including freight forwarding agents, where a single policy is issued to cover multiple
consignments being shipped to and from various ports and other locations throughout the term of the agreement.
The policy can be either:
a) for a specific value that requires renewal once the insured amount is exhausted, or
b) for an agreed period; sometimes referred to as an ‘annual policy’ as it remains in-force for a stated period of time – usually a 12-month period.
Essentially, this is an agreement between a merchant and the freight insurance company to insure all goods in transit falling within that agreement for either a specified time period or total value or until the agreement is cancelled by either party. It specifies:
- The general description of the goods
- The countries or places the goods to be insured will travel to or from
- The maximum value payable under the policy &/or the time period
- How the goods will be valued
- The conditions of insurance
2. Single cargo shipments (or 'voyage specific')
A voyage specific policy is the next most common form of marine cargo insurance, mainly taken out by individuals, small businesses or irregular shippers for one-off shipments of cargo.
The cargo is valued and the policy is priced as a single shipment and covered as one consignment from a particular destination to another. The insurance cover usually commences at the point of departure and ceases upon arrival at the final destination which may be a port or the customer's premises.
This type of protection is offered worldwide, and is also sometimes referred to as a 'voyage policy' as the insurance covers only the specific shipment/voyage.
International trade management is a certified insurance broker and is able to assist you with your cargo insurance needs. So if its time to review or you want a free risk assessment, contact your ITM representative today.