Specific Policy

A Specific Policy is a formal form of insurance policy in international trade insurance, referring to an insurance policy issued by the insurer separately for a particular shipment of goods, a particular means of transport, or a particular voyage. Unlike an Open Policy, a Specific Policy does not cover long-term, multiple shipments; instead, each shipment is insured separately and a separate policy is issued. Use cases: When the exporter has not signed a long-term open insurance contract with the insurance company, or when the importer requires a policy for each individual shipment, a Specific Policy is usually adopted. Points to note: A Specific Policy must clearly state information such as the insured, description of goods, insured amount, risks covered, voyage, and date of commencement; if a letter of credit requires an "Insurance Policy" rather than an "Insurance Certificate," a Specific Policy must be provided. Difference from an Open Policy: An Open Policy is a long-term contract under which the insured only needs to declare each shipment, and the insurance company automatically underwrites it; a Specific Policy, by contrast, is independent for each shipment and has no long-term binding force. Difference from a Certificate of Insurance: A Specific Policy is a formal policy with stronger legal effect, while a Certificate of Insurance is a simplified proof, and some letters of credit do not accept it. Therefore, foreign trade practitioners should choose the correct document according to contract and letter of credit requirements.