Open cover. Here the underwriter undertakes to insure all shipments over a specified period.
Thus the cover cannot “run off”. This undertaking is given even if the assured through some clerical oversight forgets to declare to the underwriter a certain shipment. This is a very real service the underwriter gives to the assured so the latter cannot take some of his insurance business elsewhere.
The premiums are fixed, the exporter knows his costs in advance.
Open cover will also have limits per bottom, location clauses and classification clause, as well as the appropriate Institute Cargo Clauses.
Each time a shipment is made a new policy is issued or one policy issued to cover the shipments made, say, in the course of a month. It is once again emphasised that the open cover gives protection for a definite period of time and uncertain amount of money whereas a floating policy specifies the value but not the time. A second difference is that the latter is a policy and when it is issued the law is complied with (i.e., that the policy be in writing). A floating policy is usually for a very large amount and is designed to cover many shipments. It cannot be fragmented hence the certificate of insurance.