WHY INSURANCE DOCUMENT MUST BE ENDORSED IN BLANK

QUESTION

Dear Sir

I read a lot of your information on your website and learnt a lot through it.

I am Arihant Sethia from India working in company called Swastik Interchem pvt ltd and recently we had exported some material to Nepal. In the letter of credit in section, 46A-subsection 6 we were asked to issue negotiable insurance or certificate blank endorsed covering various clauses (ICC A) till final destination in Nepal, material was sent on CIP basis and so we made insurance accordingly, but the issuing bank issued discrepancy stating ” We refuse to honour the documents stating the reason:

“Insurance not blank endorsed ”

Could you explain, I am unable to understand

It would be very helpful.

—

ANSWER

Hi,

An LC typically requires the insurance document to be in assignable form, meaning it must be issued or endorsed so that the right to receive payment under it transfers either upon or before the release of the shipping documents.

The specific endorsement requirements depend on the LC terms. The insurance document may need to be endorsed either to a named party or in blank (without specifying a party).

For example, if an insurance certificate names the beneficiary as the assured party, the beneficiary must endorse it in blank. This allows the applicant, who holds the insurance certificate, to claim payment in case of any loss or damage to the goods.

In your case, if the insurance certificate indicates your company as the assured party, it must be endorsed in blank to meet the LC requirements and align with standard industry practices.

Best regards,

Mr. Old Man