CIF Breakdown and “Irrespective of Percentage” – Two Common LC Questions

In today’s LC practice, two issues appear repeatedly and often cause confusion for both exporters and bankers.

The first is whether an invoice under CIF or CFR must show a cost breakdown, especially the insurance premium. Many presentations include partial breakdowns—or even show freight as zero—raising the question of whether such invoices are compliant when the LC itself is silent.

 The second issue concerns insurance documents, particularly when an LC requires coverage “irrespective of percentage.” Banks frequently encounter insurance certificates that still display deductibles or excess clauses, leaving practitioners unsure whether such documents can be accepted.

 The Q&A below addresses these two common problem areas with straightforward guidance.

QUESTION

Dear Mr. Old Man,

Good day. Greetings. Hope this email finds you well.

Request you to clarify the below queries:

1. CIF Breakdown on Invoice

The LC states Incoterm CIF and calls for insurance. It does not require a breakdown for CIF.

The presented invoice shows CIF and provides a breakdown for FOB and Freight, but does not include insurance cost.

However, the insurance certificate is presented and it mentions the insurance premium paid.

Can we raise a discrepancy as “invoice evidences CIF but does not mention the insurance cost”?

In many scenarios with CFR, the LC does not require a breakdown of cost and freight, yet the invoice shows CFR and freight as zero. How should we handle those cases?

   2. Irrespective of Percentage vs. Deductibles

The LC requires an insurance certificate or policy and states “Irrespective of Percentage.”

The presented insurance certificate mentions a deductible as per the insurance policy.

How should this be handled?

Request your guidance and expert opinion.

Regards,

Priya

_______

ANSWER

Dear Priya,

Thank you for your question. Here’s my response:

1/ Breakdown of CIF on the invoice

I see that the invoice shows a breakdown of CIF without mentioning the insurance premium. However, the insurance certificate is presented and it mentions the insurance premium amount paid.

In my view:

Provided the total invoice amount complies with the LC requirements, such a breakdown does not make the invoice discrepant.

It should be acceptable.

2/ Insurance document requires “Irrespective of Percentage” while the presented document shows “Deductible”

According to ISBP 821 paragraph K14, an insurance document may indicate that cover is subject to a franchise or excess (deductible). However, when a credit requires the insurance cover to be “irrespective of percentage,” the insurance document is not to contain a clause stating that the insurance cover is subject to a franchise or an excess (deductible).

Therefore, the presented insurance document that shows “Deductible as per Insurance Policy” is not complying.

It’s a discrepancy.

I hope this clarifies your questions.

Best regards,

Mr. Old Man