Marine cargo insurance in Singapore: open cover vs single shipment
How a single shipment policy works
A single shipment policy, also called a voyage policy or a facultative placement, insures one named consignment. The trader gives the insurer the goods description, packing, value, vessel or flight, route and dates. The insurer quotes a rate, the trader pays and a certificate is issued for that voyage.
The policy attaches when the goods leave the warehouse named in it and ends when they arrive at the destination warehouse, or after a fixed number of days after discharge, whichever comes first. The Institute Cargo Clauses set that period at 60 days after discharge from the vessel.
Single shipment cover suits a business with fewer than 10 to 12 shipments a year, a one-off project cargo, or a buyer under CIF or CFR terms who needs a top-up on one consignment.
It has 3 weaknesses. A shipment that leaves before the certificate is issued is uninsured. The rate per dollar is higher than on an annual contract, because the insurer has no spread. And the insurer underwrites each time, so a change in route or goods can produce a decline at short notice.
How an open cover works
An open cover is a 12-month agreement under which the insurer agrees to insure all shipments within its scope, and the trader agrees to declare all of them. Cover attaches automatically when goods start moving. The trader reports shipments on a declaration basis, either by individual declaration or by periodic bordereau, and pays premium on the declared values.
The cover sets limits per vessel, per conveyance and per location, so the insurer's exposure on any one loss is capped. It sets rates by route and goods type. It names the clauses, usually Institute Cargo Clauses (A), with the Institute War and Strikes Clauses added. It sets the valuation basis, typically CIF plus 10%.
Declaration discipline is the contract's condition. If the trader fails to declare a shipment, the insurer can treat the omission as a breach and refuse the claim. Most covers allow a late declaration made in good faith before a loss is known. A broker sets up a monthly bordereau from the shipping system.
Open cover also issues certificates. An exporter selling under CIF or CIP, or under a letter of credit, needs an insurance certificate per shipment. The broker issues these under the open cover within the same day, showing the clauses, the voyage and the sum insured at 110% of the CIF or CIP value that UCP 600 Article 28 requires.
Open cover vs single shipment: side by side
| Feature | Single shipment policy | Open cover |
|---|---|---|
| Period | One voyage | 12 months, all declared shipments |
| Attachment | On issue of the policy before shipment | Automatic when goods start to move |
| Rate | Quoted per shipment, higher per dollar | Agreed per route and goods class for the year |
| Premium payment | Up front | Deposit plus declaration adjustments |
| Administration | New submission every time | Monthly or per-shipment declaration |
| Risk of being uninsured | Shipment moves before policy issued | Shipment not declared |
| Certificates for letters of credit | Yes, one per policy | Yes, issued by the broker under the cover |
| Suits | Under 10 to 12 shipments a year, one-off project cargo | Regular import or export volume |
The break-even is not only shipment count. A trader with 8 shipments a year of S$500,000 each has more to lose from one missed policy than a trader with 40 shipments of S$20,000, and belongs on open cover.
ICC(A), (B) and (C): what each clause covers
The Institute Cargo Clauses are the standard London market wordings used in Singapore. The three sets differ in what causes of loss they cover.
| Clause | Basis | Covers | Does not cover |
|---|---|---|---|
| ICC(A) | All risks of physical loss or damage | Theft, non-delivery, water damage, handling damage, container drop, in addition to everything in (B) and (C) | Standard exclusions: wilful misconduct, ordinary leakage or wear, insufficient packing, inherent vice, delay, insolvency of carrier, war and strikes (bought back separately) |
| ICC(B) | Named perils | (C) perils plus earthquake, volcanic eruption, lightning, washing overboard, entry of sea or river water, total loss of a package in loading or discharge | Theft, pilferage, non-delivery, rain water, handling damage |
| ICC(C) | Named perils, narrowest | Fire, explosion, vessel stranding or sinking, overturning or derailment of land conveyance, collision, discharge at a port of distress, general average sacrifice, jettison | Everything in (B) and (A) not listed |
Incoterms 2020 ties two rules to these clauses. Under CIP the seller must insure to ICC(A) level. Under CIF the default remains ICC(C), with parties free to agree more.
Most open covers for finished goods use ICC(A). Bulk commodities such as scrap, grain or ore often use ICC(C) or (B) because theft and handling damage are not the loss pattern. The Institute Cargo Clauses explainer sets out the exclusions in full.
What the premium is charged on
Cargo premium is a rate applied to the insured value. The insured value is not the invoice. Market practice and Incoterms both use CIF plus 10%: the cost of goods, insurance and freight, plus 10% to cover profit, duty paid in advance and the cost of replacing the goods.
A S$100,000 invoice shipped CIF Singapore with S$4,000 freight and S$300 premium has a CIF value of S$104,300. Insured value at CIF plus 10% is S$114,730. The rate applies to that figure. If the letter of credit asks for 110% of CIF, the certificate shows the same number. The figures are an example; the rate itself is set by the insurer for the route and goods.
Four things move the rate.
- Goods. Electronics, pharmaceuticals and branded consumer goods attract theft and carry higher rates than machinery.
- Route and mode. Transhipment, inland legs in high-risk countries and deck cargo cost more. Air is usually cheaper than sea per dollar insured.
- Packing and container type. Full container loads rate lower than less-than-container loads.
- Claims record. 3 years of declarations and claims set the renewal rate.
The Hague-Visby Rules, given force in Singapore by the Carriage of Goods by Sea Act, cap the carrier's liability at 666.67 SDR per package or 2 SDR per kilogramme. That cap is why the insured value, not the carrier's liability, is the number to insure.
When the forwarder's insurance is not enough
Freight forwarders offer cargo insurance at booking, usually under the forwarder's own open cover, with the forwarder as the insured. Three things need checking.
- Clauses. Forwarder cover is sometimes ICC(C) or a limited wording, not ICC(A).
- Limits. A per-shipment or per-container limit may be below the cargo value.
- Claims control. The forwarder is the insured, so the shipper claims through the forwarder, who may also be the party at fault.
A trader with its own open cover controls the clauses, the limits and the claim. The forwarder's liability for loss in its own custody, under its standard trading conditions, is usually capped by weight in the same way as the carrier's.
The GIA reports that domestic general insurance claims paid rose 8.7% to S$1.8 billion in 2025. Cargo insurers price the same cycle. A clean declaration record and a complete loss history are the trader's levers on rate. The marine cargo page lists what an open cover submission needs.
Frequently asked questions
How many shipments a year justify an open cover?
Around 10 to 12 regular shipments is the usual threshold, but value matters more than count. A trader with a few high-value consignments should use open cover because one missed single shipment policy is a total loss. The administration cost of an open cover is a monthly declaration.
What is the difference between ICC(A), (B) and (C)?
ICC(A) covers all risks of physical loss or damage subject to standard exclusions. ICC(B) covers named perils including sea water entry and earthquake. ICC(C) covers the narrowest set: fire, explosion, sinking, collision, jettison and general average. Theft and handling damage are covered only under (A).
Is the premium charged on invoice value or CIF plus 10%?
On the insured value, which is usually CIF plus 10%. The 10% covers profit and the cost of replacement. Letters of credit under UCP 600 Article 28 require insurance of at least 110% of the CIF or CIP value, so the two figures match.
Does cargo insurance cover delay?
No. Loss or expense caused by delay is excluded under all three Institute Cargo Clauses, even when the delay is caused by an insured peril. Loss of market and demurrage are not covered. Physical damage to perishable goods caused by a covered peril remains covered.
Sources
General information only, not advice on any particular policy. Cover depends on the policy wording and the insurer's terms.