Duration of
cover
There will be a clear stipulation from which moment
until which moment cover is granted. Read that part of the policy or certificate
very carefully; if you experience a loss outside that given timeframe, you are
not covered. Note too that 'warehouse to warehouse' does not mean any warehouse
that may be suitable - it is always a warehouse at the stated place of
destination. This may well be different from the final destination the goods may
travel to.
Exclusions
The policy or certificate may contain exclusion of
particular risks, for example the nuclear energy exclusion clause. Another
likely exclusion is for war on land, not to be confused with coverage against
SRCC risks (strikes, riots, civil commotion). There will also be other
exclusions, sometimes based on the location of a particular risk.
Deductibles or
franchises
It may well be that the underwriter does not cover
all of the risk and only agrees to insure 80%. Alternatively the first so many
thousands of dollars of any claim will not be paid. Indirectly, this is the same
thing. The objective of such stipulations is to ensure that the client, the
insured, makes every effort to avoid claims occurring, that is, they practice
risk avoidance.
Agreeing to deductibles - also called franchises -
will also save some premium, but avoid a situation where in case of a major
disaster the total amount of such deductibles could put the company's financial
health at risk.
Premiums
The policy will stipulate the amount of premium to
be paid, how the monthly declarations shall be made to the underwriters, and the
way and time limit within which invoices need to be paid. Remember that unpaid
premiums can result in cover lapsing. Underwriters usually view single risks as
more speculative and more expensive to administer than declarations under an
open cover or declaration policy. Rates under open covers are therefore
generally much lower than those for single risks.