Definition
In insurance law, an open policy is a contract of insurance in which the value of the insured subject — whether a ship, cargo, or other property — is not fixed or agreed upon at the time the policy is issued. Instead, that value is left to be determined at the time of loss, based on the actual value of the subject matter at that point. The insured bears the burden of proving the value of the loss when making a claim.
Open policies are most commonly encountered in marine insurance, where the fluctuating value of cargo or vessels makes advance valuation impractical. They operate as genuine contracts of indemnity: the insurer pays actual loss, no more, no less.
Common Confusion
OPEN POLICY vs. VALUED POLICY
These two terms are the essential opposition in insurance law, and historical sources define each primarily by contrast with the other. In a valued policy, the parties agree in advance on the value of the insured subject and record that figure on the face of the policy. That agreed value becomes conclusive in the event of a total loss, regardless of the actual market value at the time of loss. In an open policy, no such advance agreement exists. The insured must prove actual value if loss occurs, which means the insured carries the evidentiary burden rather than benefiting from a fixed, pre-agreed figure. Confusing the two leads to serious errors in understanding both the underwriter's exposure and the insured's obligations after a casualty.
Why It Matters in Research
Researchers working in marine insurance materials — the context where open policy is overwhelmingly concentrated in historical sources — need to track how courts treated the burden of proof question over time. Burrill's entry is the most instructive on this point: it explicitly frames the open policy as one that "casts upon him [the insured] the burden of proof when he claims an indemnity." This is not merely procedural. In a valued policy dispute, the agreed value forecloses most valuation arguments; in open policy disputes, the fight over value can be the entire litigation.
Historical insurance materials frequently pair open policy discussions with questions of insurable interest, partial loss, abandonment, and average clauses — all of which turn on how value is established. Researchers should treat "open policy" as a gateway into those adjacent doctrines rather than as a self-contained concept.
Modern insurance practice has largely migrated toward standardized forms with declared values, and pure open policies in the classical sense are less common outside commercial marine and specialty lines. Researchers working in twentieth-century and later materials should be alert to hybrid forms and to jurisdictions that have enacted valued policy statutes (which, in some states, mandate that certain residential property policies be treated as valued policies after total loss). Those statutes represent an important rupture from the classical open/valued distinction and are largely invisible in the historical dictionaries.
Historical Dictionary Support
The four historical sources are in close agreement on the core definition. All four identify the essential feature as the absence of a fixed value for the insured interest, left instead to ascertainment at the time of loss. Black's is the most expansive, explicitly invoking the contrast with valued policies and citing Mozley & Whitley. Rapalje & Lawrence offer the most economical statement. Bouvier and Burrill add the burden-of-proof dimension — Burrill most directly, citing Kent's Commentaries and Duer on Insurance for the proposition that the open policy "casts upon" the insured the proof burden.
No significant divergence exists among the sources on doctrine. The gap is one of completeness: none of the historical sources addresses what happens in jurisdictions with valued policy statutes, the treatment of partial losses under open policies, or the role of agreed valuation endorsements that can convert what begins as an open policy into something functionally closer to a valued one. Researchers relying solely on historical dictionary entries will get an accurate but incomplete picture.
Jurisdictional Note
A number of U.S. states have enacted valued policy laws that require insurers to pay the full face amount of a policy in the event of a total loss of real property, effectively eliminating the open policy framework for those risks regardless of what the policy form says. These statutes vary considerably in scope and application. Researchers should identify whether the jurisdiction at issue has such a statute before assuming the classical open/valued policy distinction governs.