Floating Policy

A Floating Policy is a long-term, blanket open insurance policy in marine insurance, typically used for cargo transportation insurance. Its core features are: the insured and the insurance company agree on a total insured amount, coverage scope, and premium rate. During the policy period, the insured only needs to declare each shipment to the insurance company after dispatch, and the insurance company automatically covers it without issuing a separate policy for each shipment. It is mostly used by enterprises with frequent exports or imports, simplifying insurance procedures and reducing the risk of missed coverage. Precautions include: the insured must declare in good faith; if there is omission or misrepresentation, the insurance company may refuse to pay claims. The insured amount for each shipment is deducted from the total insured amount. When the cumulative declared amount reaches the total insured amount, the policy terminates and renewal is required. Compared with a Specific Policy, a Floating Policy is more efficient but slightly less flexible; similar to an Open Policy, but a Floating Policy usually has a fixed total insured amount, while an Open Policy may have no total insured amount limit. Foreign trade practitioners should choose the appropriate policy based on business frequency and risk.