There are two ways in which transit can be insured one of covering under the specific policy and the open policy.

Specific Policy / Specific voyage policy:

Under the specific policy, for every transaction or dispatch insurance is to be negotiated, the premium to be paid and cover arranged. For small traders, this arrangement may be suitable but for large Importer/Exporter, this is very cumbersome.

Open Policy/Cover:

It is issued for an amount representing two or three months turnover (at least) and as and when the dispatches are made the same as declared to the insurer who issues a certificate of insurance and reduce the balance available for future dispatches in their records, by the amount of declaration. The policy gets over when either the period of insurance expires or the amount of insurance gets exhausted. However, the amount can once again be reinstated by paying another premium.

Advantages:

  • Long term contract, no need to negotiate a fresh for every dispatch.
  • Facility of declaration after dispatch
  • Automatic coverage up to amount agreed
  • Losses occurring before declaration also covered
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