Open Cover Insurance

Abstract

Open cover insurance is widely used in cargo insurance in international trade. In particular for the long-term and large-volume export-import trade, open cover insurance is almost the inevitable choice. This is because, on the one hand, from the assured’s point of view, open cover insurance can relieve him from repetitive negotiations on the terms and conditions of the cargo insurance for the same kind of trade, and meanwhile provide some other advantages such as simplified procedures and lower premiums; on the other hand, from the insurer’s point of view, he can benefit from simplified procedures and fixed premium income.

This thesis begins with a general introduction to open cover insurance system as such, including the identification of, comparison and interaction between relevant definitions of and documents used in open cover system (Chapter 2). And then the thesis will go on introducing four main and characteristic clauses used in the open cover system, including the rationale behind the clauses (Chapter 3).

The declaration obligation has certain significance in the whole open cover insurance system, the flaw of which may result in the loss of coverage of concerned shipment(s). Therefore, the second half of this thesis will deliberate on issues regarding declaration obligation. The source, nature, function and practice of declaration will be considered in detail in Chapter 4. Chapter 5 will concentrate on the issues revolving around non-declaration by the assured.