LEAD-IN. ¨ What is an insurance policy?

¨ What is an insurance policy? What contract does it prove?

¨ What is the difference between a cover note and a policy?

¨ What kinds of policy do you know?

¨ Compare insurance policy and cover note (p.544-545, p.559-560).

What are the main features of both? Is there any difference between them?

If any, define it.

When the insurance is arranged between the underwriters (the insurers) and the suppliers (the insured), a cover note is issued to the insured by their insurance underwriters. This brief notice tells the insured that their goods are “covered” and that the insurance policy will soon be issued.

The policy is the principle document and is the instrument embodying the contract. But as the policy may cover a certain period of time, or many shipments of goods. Another document is used called the certificate. This is used for each shipment that is made, the particulars of the consignment are entered on a declaration form and the insurance agents issue the certificate to the senders on behalf of the insurers.

There are various kinds of policy, such as a “voyage” policy, which is used for one voyage only. A “time” policy is used for a period of time.

More commonly used is the “floating” policy which covers large quantities of goods for a period (often for one year). Each shipment requires a separate certificate. There is also an arrangement called “Open Cover”, where all consignments are covered by the insurer.

Marine insurance offers shippers a variety of policies to cover shipments. However, most exporters ship under an all-risk, valued policy which covers them against most eventualities and allows them compensation for loss or damage, plus ten per cent.

The premium is the money paid by the insured for their policy. It is quoted as a percentage. For example, in the UK it is quoted as pence per £100. 75 % is 75p for £100 insured.