Insurance Certificate Compliance – Endorsement and Policy Number Clarification under LC

QUESTION

Dear Sir,

Good afternoon!

I have two questions regarding the Insurance Certificate.

Q1.

The LC includes the clause: “Insurance Policy or Certificate should be issued to the order of National Bank of XYZ, EGYPT.”

The bill of lading contains a similar clause: “Full set of shipped on board B/L issued to the order of National Bank of XYZ, EGYPT”, with the Notify Party shown as the applicant.

The insurance certificate issued by the insurer includes:

• Consignee: To the order of National Bank of XYZ, EGYPT
• Insured: Beneficiary of the L/C

The bank has raised the following discrepancy: “Insurance certificate evidences insured party and consignee inconsistent with each other.”

Is this a valid discrepancy?

If yes, what should be stated in the “Insured” field?

Q2.

In the case of an insurance certificate, must it indicate the number of the insurance policy under which it is issued?

The certificate we received includes the following:

• Insurance Certificate Number: 4563247/711244
• Insurance Policy Number: 23545497/OHM/L2

Is this acceptable as per the LC clause?

Best regards,

Mike

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ANSWER

Hi Mike,

Thank you for your questions. Here are my responses:

Q1:

While the insurance certificate may indeed contain a discrepancy, the one raised by the bank is not entirely accurate. The consignee and the insured are not required to be the same, and if the consignee is mentioned in the insurance certificate, it should be treated as additional information only.

The actual issue lies in the LC requirement that the insurance certificate be issued to the order of National Bank of XYZ, EGYPT, whereas the presented document shows the insured as the LC beneficiary. Therefore, the correct discrepancy should be:

“Insurance certificate not issued to the order of National Bank of XYZ, EGYPT.”

This can be corrected if the beneficiary endorses the insurance certificate to the order of the issuing bank.

Q2:

An insurance policy is the actual contract of insurance, while an insurance certificate is a summary document that provides evidence of the coverage under that policy. As such, an insurance certificate may contain both a certificate number and a policy number.

The document you received shows both, and is acceptable.

No discrepancy.

Best regards,

Mr. Old Man