Types of Cargo Policies, Endorsements, and Certificate of Insurance
Scope
This domain tests the policy forms used for cargo, the effect of endorsements and the role of the certificate of insurance. It requires you to match the commercial sale term to the correct policy structure.
Policy types
- A single-voyage policy covers one identified shipment from a named origin to a named destination.
- An open cover is a standing agreement to insure all shipments falling within its terms; the insured must declare every shipment, and the insurer issues certificates or policies per shipment.
- A floating policy states a total sum insured and is written down by declarations until exhausted.
- Contingent interest cover protects a seller or buyer whose interest may fail because the other party's insurance is absent or invalid.
- Increased-value cover sits above the primary cargo policy for the buyer's expected profit or duty.
- Duty insurance covers customs duty at risk when cargo is damaged before duty is paid.
Endorsements and certificates
Endorsements may assign the policy, change the voyage or destination, extend the warehouse-to-warehouse period, add a held-covered clause, waive subrogation or alter cancellation and return-premium terms. A certificate of insurance is evidence of cover under an open cover; it is not a separate policy and does not create cover beyond the master terms.
Worked example
A CIF seller has an open cover with ICC(A). It ships goods and issues a certificate to the buyer. The certificate incorporates the open-cover terms. If the goods are damaged by seawater, the buyer can claim as certificate holder or assignee, subject to the same exclusions and limits. If the seller failed to declare that shipment, the insurer may treat the declaration obligation as breached unless a held-covered provision applies.
Traps
Do not treat a certificate as a negotiable bill of lading. Do not assume an open cover automatically covers a shipment outside its geographical or cargo scope. Do not ignore the declaration obligation.