Insurance Certificate Made Out to Order of Issuing Bank — Is Blank Endorsement Required?

Intro

Every now and then, a document-checking question looks like a discrepancy at first sight, but a closer look at the purpose of the document may tell a slightly different story.

In this case, the LC requires the insurance certificate to be made out to order and blank endorsed, while the insurance certificate presented is made out to the order of the issuing bank but is not blank endorsed.

So, is the missing blank endorsement really a discrepancy?

QUESTION

Hi Mr. Old Man,

I would appreciate your advice on the following:

The LC requires the insurance certificate to be made out to order and blank endorsed.

However, the insurance certificate presented is made out to the order of the issuing bank but is not blank endorsed.

From your point of view, is this acceptable?

Appreciate your feedback.

Thank you.

Amrina Zahari

_______

ANSWER

Dear Amrina,

Thank you for your question.

At first sight, there appears to be a discrepancy because the LC requires the insurance certificate to be made out to order and blank endorsed, whereas the insurance certificate presented is made out to the order of the issuing bank without a blank endorsement.

However, in my view, this does not necessarily prevent the issuing bank from obtaining the benefit of the insurance cover.

Since the insurance certificate is made out to the order of the issuing bank, the issuing bank is already the party entitled under the document. Therefore, the absence of a blank endorsement does not appear to prejudice the issuing bank’s rights.

If necessary, and where the issuing bank wishes to pass the right to claim under the insurance to the applicant, the issuing bank may endorse the insurance certificate in blank in accordance with ISBP 821, paragraphs K21(a) and (b).

Accordingly, in my view, the insurance certificate should be acceptable from a document-checking perspective, although technically it does not comply with the LC requirement for a blank endorsement. The issuing bank may therefore waive the discrepancy, if it considers the missing endorsement to be a discrepancy under the LC terms.

Best regards,

Mr. Old Man