A company that exports regularly cannot negotiate a policy for each shipment. The open policy solves that problem: it automatically covers all shipments that fit the agreed conditions, leaving the declaration for later.
What it covers and from when
It covers the goods throughout the contracted journey, usually from warehouse to warehouse, which includes the prior and subsequent land legs to the main one and reasonable intermediate stays. That warehouse-to-warehouse clause is what avoids the classic gap: the damage occurring in the truck taking the container to the port, when the policy only contemplated the maritime leg.
The three limits that must be set
The limit per mode of transport, which must cover the highest value individual shipment and not the usual one. The accumulation limit in storage, for when several shipments coincide in a transit warehouse or terminal. And the accumulation limit on the quay or in deposit, relevant in port operations. It is in the last two where most surprises appear, because nobody foresees the accumulation until it occurs.
How it is declared: application or regularisation
Two systems. By application, each shipment is communicated before departure, with exact premium and no margin for error, but with administrative burden. By regularisation, an advance premium is paid and the transported volume is periodically declared, adjusting at the end. The second is usual for exporters with volume, and its only serious requirement is to declare rigorously: the repeated omission of shipments allows the insurer to question the cover.
The certificate the bank requests
In operations with documentary credit, the bank requires an insurance certificate per shipment with specific conditions: insured amount of 110% of the CIF value, currency of the operation, and determined cover clauses. The open policy allows it to be issued instantly, and that operational detail is often the real reason an exporter contracts it.
What value to declare
The standard is the invoice value plus freight plus a 10% expected profit, which compensates for the lost margin and associated expenses. Declaring only the manufacturing cost leaves out the part that really hurts. And for seasonal goods, it is advisable to review the criterion before the campaign, not after the first claim.
