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📦 '''Open policy''' is a type of [[Definition:Marine insurance | marine]] or [[Definition:Cargo insurance | cargo insurance]] contract that provides continuous coverage for multiple shipments over a defined period, rather than requiring the [[Definition:Insured | insured]] to arrange separate [[Definition:Insurance policy | policies]] for each individual consignment. It is sometimes called a floating policy or open cover, and it is the backbone of commercial cargo programs for businesses with regular, high-volume shipping activity. The [[Definition:Policyholder | policyholder]] agrees to declare each shipment — typically by submitting periodic [[Definition:Bordereaux | bordereaux]] or individual declarations — and the [[Definition:Insurance carrier | insurer]] covers each one automatically under the master terms.

⚙️ Under an open policy, the broad [[Definition:Coverage | coverage]] terms, [[Definition:Premium | premium]] rates, [[Definition:Deductible | deductibles]], and [[Definition:Policy limit | limits]] are negotiated upfront and documented in the master contract. As shipments occur, the insured reports them — often monthly — detailing values, routes, and cargo types. The insurer then calculates the [[Definition:Earned premium | earned premium]] based on declared values and the agreed rate schedule. If the insured fails to declare a shipment, coverage may still attach (depending on policy language), but disputes over [[Definition:Nondisclosure | nondisclosure]] or late reporting can complicate [[Definition:Claims processing | claims]]. Some open policies set an aggregate [[Definition:Policy limit | limit]] per vessel, per location, or per period to cap the insurer's [[Definition:Exposure | exposure]] on any single accumulation event.

🔑 For importers, exporters, and global supply chain operators, the open policy eliminates the administrative burden of arranging coverage shipment by shipment — a process that would be impractical for companies moving goods daily across multiple routes. From the [[Definition:Underwriting | underwriter's]] perspective, the arrangement provides a steady [[Definition:Premium | premium]] stream and the opportunity to build a long-term relationship with the insured, though it demands robust monitoring of declared values to guard against [[Definition:Moral hazard | moral hazard]] and under-reporting. Open policies are also a common structure in [[Definition:Lloyd's of London | Lloyd's]] and the [[Definition:London market | London market]], where [[Definition:Coverholder | coverholders]] may manage open cargo facilities on behalf of [[Definition:Lloyd's syndicate | syndicates]], adding a layer of [[Definition:Delegated underwriting authority (DUA) | delegated authority]] oversight to the arrangement.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Marine insurance]]
* [[Definition:Cargo insurance]]
* [[Definition:Floating policy]]
* [[Definition:Bordereaux]]
* [[Definition:Inland marine insurance]]
* [[Definition:Warehouse-to-warehouse clause]]
{{Div col end}}

Definition:Open policy - Revision history

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