The open cargo policy is framed to serve the purpose of the regular shippers. The approved merchandises are automatically offered protection under the sales terms. This helps nullify the requisition of negotiating the terms and conditions, limits and rates for insuring each and every shipment. Under this type of coverage policy the merchandises can be covered “All Risk”, With Average (WA) or Free of Particular (FPA).
All Risk coverage
This is the most extensive form of coverage that insures approved cargo against the loss or damage caused by any external forces. This policy includes new, packaged goods that are not vulnerable to pilferage or breakage. The “All-Risk” policy does not offer coverage for the losses that might be incurred in the course of international freight transition.
The exclusions in“All-Risk” coverage are:
- Disposition of Cargo
- Inappropriate packaging of the goods
- Refutation of the goods by the customers
- Loss due the nature of the cargo itself
- Failure to collect accounts or make payments
- The change or transfer of employees or their dishonesty
- Delay of loss of the market
- Losses that exceeds the coverage limits
- Used goods
- Barge shipments
- Losses incurred at the port more that 15 days after the goods had been discharged off.
- Losses incurred inlands more that 30 days after the freight had been discharged.
- Losses incurred to the goods that are subjected to on-deck billing.
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Losses incurred due to air pressure of fluctuating temperature in case of air shipments
- Failure to inform the air carrier timely about the initial losses
- Non- delivery – 120- days
- Hidden damage- 14 days
- Obvious damage- 7 days
Free Of Particular Average of FPA
This is mainly a limited coverage that offers coverage to waste materials, used goods and the goods that are subjected to on-deck bill of landing. This policy offers coverage against losses caused by FPA hazards which includes stranding, collision, sinking or burning of the vessel or any other catastrophe on shore like fire, earthquake, derailment or the collapse of the dock.
FPA conditions loss coverage
| Harsh weather, lightning, barratry of the mariners or masters, assailing thieves | Covered (only for Total Loss) |
| Stranding, burning, sinking, collision, fire while on deck | Covered |
| Stranding, burning, collision while under deck | Covered |
| Explosion or fire | Covered |
| Stranding, sinking or burning of the ship or the craft | Covered |
| Collision or crash of a land or air conveyance | Covered |
| Collision or a marine conveyance with any external object like ice-berg other than water | Covered |
With Average or WA coverage
This policy acts as an extension of the FPA to cover the damages incurred by harsh weather. Eventually in many cases the FPA and WA may be extended to cover non-delivery, theft and pilferage.
Comparisons:
| LOSSES | FPA | WA | ALL-RISK |
| Sinking | Covered | Covered | Covered |
| Stranding | Covered | Covered | Covered |
| Collision | Covered | Covered | Covered |
| Burning | Covered | Covered | Covered |
| Bursting of boilers | Covered | Covered | Covered |
| Vessel Management Errors | Covered | Covered | Covered |
| Defects machinery or hull | Covered | Covered | Covered |
| Jettison | Covered | Covered | Covered |
| Perils or harsh weather | Covered * | Covered | Covered |
| Seawater | Covered * | Covered | Covered |
| Fresh water | Uncovered | Uncovered | Covered |
| Mud, grease or hook damage | Uncovered | Uncovered | Covered |
| Fault storage by the carrier | Uncovered | Uncovered | Covered |
| Non-delivery of the entire package | Uncovered | Uncovered | Covered |
| If the entire consignment is stolen | Uncovered | Uncovered | Covered |
| Leakage | Uncovered | Uncovered | Covered |
| Pilferage | Uncovered | Uncovered | Covered |
| Breakage | Uncovered | Uncovered | Covered |
* only total losses and not partial losses -Certain exclusion and alterations may take place in coverage polices depending upon the nature of the consignment.
