Open Policy Vs Floating Policy In Marine Insurance: Are They The Same?

Open Policy vs Floating Policy in Marine Insurance: Are They the Same?

Short answer: yes, they're the same product. Open policy and floating policy refer to the identical marine insurance structure — a single contract covering all shipments an exporter declares over a policy period, usually 12 months. "Floating policy" is the formal, statutory term defined in Indian law; "open policy" is the everyday commercial term used by insurers and brokers today. There is no product difference between the two names.

Where "Floating Policy" Comes From

Section 31 of the Marine Insurance Act, 1963 — the statute that governs marine insurance in India — defines a floating policy as one that describes the insurance in general terms, leaving the name of the ship and other shipment particulars to be filled in through subsequent declarations. Those declarations are made by endorsement on the policy as each shipment occurs. This is the legal foundation for what the market now more commonly calls an "open policy."

Where "Open Policy" Comes From

As the Indian marine insurance market modernized, "open policy" (and sometimes "open cover") became the preferred term in day-to-day commercial use — used by insurers, brokers, banks, and exporters alike. It describes the exact same structure defined under Section 31: one annual contract, ongoing declarations, no separate policy per shipment. The shift in terminology is a matter of market usage, not a change in the underlying product.

What Both Terms Actually Mean

• One contract, valid for a fixed period — typically 12 months
• Covers every shipment declared during that period, without a new policy each time
• Each shipment must still be declared — value, cargo, route, mode of transport — as it occurs
• Premium is calculated per declaration and typically settled periodically, not paid as one lump sum
• Designed for exporters and importers with regular, ongoing shipment volume, as opposed to one-off consignments

Why the Confusion Exists

Exporters often encounter both terms — sometimes in the same conversation, sometimes from different insurers or brokers — and reasonably wonder if one is more limited or costs less than the other. It doesn't. The confusion is purely terminological: "floating" reflects the language of the 1963 Act, while "open" reflects how the market talks about the same product 60 years later. Some markets outside India — such as parts of the London and U.S. markets — do draw finer distinctions between "open cover" and "floating policy" based on local conventions, but within the Indian market, the terms are treated as synonyms.

Side-by-Side Comparison

Frequently Asked Questions

Want the full breakdown of coverages and add-ons? See our complete guide: Annual Open Marine Insurance Policy.