Marine insurance in India is a vital aspect of the country's economy, given its extensive coastline and dependence on maritime trade. It is a type of insurance that covers the loss or damage of ships, cargo, terminals, and any transport or cargo-related property.

Open policy in marine insurance is a relatively new concept in India, which has been gaining popularity in recent years. This is because this policy promotes transparency and reduces the risk of disputes between the insurer and the insured. This policy is particularly useful for businesses that regularly transport high-value cargo and require frequent insurance coverage. As the Indian economy continues to grow and international trade expands, it is expected that open policy will become more widespread in the marine insurance sector. In this blog, we will discuss what is an open policy in marine insurance and what benefits it provides to the businesses involved in the Indian maritime sector.  

Fundamentals of Open Policy in Marine Insurance

An open policy in marine insurance is a contract that provides coverage for multiple shipments within a specific period. It is a convenient option for businesses that frequently ship goods and want to avoid the hassle of obtaining individual policies for each shipment. The purpose of an open policy is to provide comprehensive and continuous coverage for all shipments, ensuring that businesses are protected against potential losses.

This policy allows the insured to declare the value of their cargo at the time of shipment, rather than at the time of policy issuance. This eliminates the need for multiple declarations and saves time and effort. Here, the insured can declare the true value of their cargo, which can be beneficial in case of any loss or damage during transit. Another important feature of an open policy is that it provides automatic coverage for new shipments, eliminating the need for the insured to notify the insurer of each shipment. On the other hand, the insurer can issue a single policy for a certain period, which reduces administrative costs and paperwork.

There are two types of coverage offered under an open policy: specific and floating. Specific coverage provides coverage for a specific shipment or group of shipments, while floating coverage provides coverage for all shipments made during the policy period, up to a certain limit. Floating coverage is more commonly used as it provides more flexibility and convenience for businesses.

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Operational Aspects of Open Policy in Marine Insurance

  • Policy Issuance

In India, marine insurance companies issue open policies to their clients. The policy is issued for a specific period and covers all the shipments made by the client during that period. The policyholder is required to declare the value of the goods to be insured at the start of the policy period. The policy document contains all the terms and conditions of the policy, including the coverage limit, deductibles, and exclusions.

  • Duration and Renewal

The duration of an open policy is typically one year, but it can be extended upon renewal. The policyholder must provide details of the shipments made during the policy period and pay the premium for the additional coverage required. The renewal premium is calculated based on the actual shipments made during the previous policy period.

  • Premium Calculation

The premium for an open policy is calculated based on the value of the goods to be insured, the type of shipment, and the risk involved. The premium rates are fixed by the insurance company and are subject to change based on market conditions. The premium can be paid in advance or on a monthly basis as agreed upon by the policyholder and the insurance company.

Open policies in marine insurance provide a convenient and cost-effective way for businesses to insure their shipments. They eliminate the need for separate policies for each shipment and provide coverage for all the shipments made during the policy period. However, policyholders need to understand the terms and conditions of the policy and declare the correct value of the goods to be insured to avoid any disputes during the claims settlement process.

Claim Process in Open Policy

  • Notification of Loss

In the event of a loss, the insured must notify the insurer as soon as possible. The notification should include the policy number, the date and time of the loss, the location of the loss, a brief description of the loss, and contact information for the insured. Failure to notify the insurer promptly may result in the claim being denied.

  • Documentation Required

The insured must provide the insurer with all necessary documentation to support the claim. This may include a copy of the policy, the original invoice or bill of lading, a survey report, and any other relevant documents. The insurer may also require the insured to provide a statement of the circumstances surrounding the loss.

  • Settlement of Claims

Once the insurer has received all necessary documentation, they will assess the claim and determine the amount of the loss. The insurer will then make payment to the insured based on the terms of the policy. The settlement may be made in cash, by cheque, or by electronic transfer.

It is important to note that the insured has a duty to mitigate their losses and take reasonable steps to prevent further damage. Failure to do so may result in the insurer reducing the amount of the claim.

Overall, the claims process for open policy in marine insurance is straightforward and efficient, provided all necessary documentation is provided and the insured notifies the insurer promptly.

Challenges and Considerations in Open Insurance

  • Risk Assessment

One of the major challenges faced by marine insurance companies in India is the accurate assessment of risk. This is particularly difficult in the case of marine insurance as many factors can impact the safety of a vessel, such as weather conditions, cargo type, and the experience of the crew. To address this, insurance companies must invest in advanced risk assessment technologies and employ experienced underwriters who can accurately evaluate the risks involved.

  • Compliance with Regulations

Another challenge faced by marine insurance companies in India is ensuring compliance with regulations. The marine insurance sector in India is subject to a range of laws and regulations, including the Marine Insurance Act, of 1963, and the Insurance Regulatory and Development Authority of India (IRDAI) regulations. To ensure compliance, companies must invest in legal expertise and maintain a thorough understanding of the regulatory landscape.

  • Dispute Resolution

Dispute resolution is a significant consideration for marine insurance companies in India. Disputes can arise in a variety of situations, such as claims for damage to cargo or disputes over policy terms and conditions. To ensure efficient and effective dispute resolution, companies must invest in experienced claims handlers and legal support. They must also maintain a clear and transparent claims process to ensure that disputes are resolved quickly and fairly.

To sum up, marine insurance companies in India face a range of challenges and considerations, including accurate risk assessment, compliance with regulations, and efficient dispute resolution. To address these challenges, companies must invest in advanced technologies, legal expertise, and experienced underwriters and claims handlers.


Embracing an open policy in marine insurance is a strategic move that aligns with the evolving dynamics of the maritime industry. By fostering transparency, flexibility, and collaboration, open policies not only enhance risk management but also promote a more resilient and responsive approach to the challenges faced by the marine insurance sector. Stakeholders should consider the benefits of adopting open policies, including improved communication, streamlined processes, and a heightened ability to adapt to changing circumstances.

Frequently Asked Questions

  1. What are the typical conditions associated with an open policy in marine insurance?

Typical conditions associated with an open policy in marine insurance include a predetermined limit on the amount of coverage provided, a requirement that the insured notify the insurer of all shipments made during the policy period, and a requirement that the insured maintain records of all shipments made during the policy period.

  1. How does a floating policy relate to an open policy within marine insurance?

A floating policy is a type of marine insurance policy that provides coverage for shipments that are not yet identified at the time the policy is purchased. It is similar to an open policy in that it covers multiple shipments, but it differs in that it does not specify the value of the shipments to be covered.

  1. How important is the Role of Insurance Brokers and Agents in Marine Insurance?

Insurance brokers and agents are indispensable in India's marine insurance sector, serving as intermediaries between clients and insurers. Leveraging their market expertise, they secure optimal coverage at competitive rates. They guide clients through policy intricacies, ensuring clarity on terms, exclusions, and limitations to preempt disputes. Moreover, brokers facilitate smooth claims processing, aiding clients in claim preparation and liaising with insurers for swift resolutions.