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In our last journal we touched on the subject of the "currency" of international trade.We would now like to discuss in this journal and the next few to come the purpose and benefit of ocean marine cargo policies.

What is an open cargo policy? It is a form of long term cargo contract arranged by a broker with designated terms and limits. The open cover is agreed to cover all shipments commencing transit within a specified period or, if "always open", from a specified attaching date. All shipments of the assured, coming within the scope of the cover from the date of attachment, must be declared as they go forward. Late or overlooked advice's are acceptable if the lateness or error is in good faith. A valuation clause is inserted in the cover so that there can be no disagreement over the value to be declared, in the event of declaration after loss. The insurer undertakes to accept all shipments coming within the scope of the cover without exception, subject only to a specified limit any one vessel. The limit any one vessel is also specified as the limit of liability in any one location prior to shipment, but in some instances this may be increased to more than the limit any one vessel.

To protect the insurer from continuance of an open cover which is proving unprofitable, a cancellation clause is included permitting either party to cancel the cover by giving the requisite period of notice (usually 30 days notice, but 7 days notice for war and strikes risks or 48 hours notice for strikes risks on shipments to or from Canada and USA). An assured who wishes to cancel is equally obliged to give the requisite notice of cancellation and must continue to declare shipments until the notice period expires.

The advantage of the open cover to the merchant is that he has permanent forward cover at fixed rates and can carry on his business without worrying about future insurance charges or whether insurance cover is obtainable. The advantage to the insurer is a continuous flow of premium income from a recognized source and the cutting down of detailed work. The broker equally benefits from the reduction in work since he only has to place the insurance at the commencement of the cover. Insurance certificates detailing the insurance conditions are issued to the assured. As each shipment goes forward the assured completes a certificate by filling in the name of the carrying vessel and details of the shipment. He sends a copy of the certificate to his broker who advises the insurer. Monthly, the premium is calculated on all used certificates.

The Mariner's Smile

At my age, I've seen it all, done it all, heard it all...I just can't remember it all!

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Peter J. Taylor, President. Underwriters and Intermediaries in Ocean and Air Cargo, Inland Transit, Transit Liabilities, Marine Liabilities, Commercial Hull, Yachts and Hovercraft.

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