EXCLUSION CLAUSES IN INSURANCE DOCUMENTS

QUESTION

Dear Mr Old Man,

I have a question that needs your explanation:

L/C requires “Insurance certificate covering Institute Cargo Clause (A)
Insurance certificate presented shows: Institute Cargo Clause (A) excluding Rust and Oxidization

Questions:

Would the exclusions constitute a discrepancy?

What are exclusion clauses in an insurance document covering all risks or Institute Cargo Clause (A)?

Thank you.

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ANSWER

Hi,

There is no discrepancy. If the L/C requires an insurance document covering all risks or ICC (A), the insurance document presented excluding any risks is accepted provided that it contains "all risks" clause or notation.

Banks do not care which risks are excluded from coverage by the insurance document.

Please refer to ISBP para. 173, which says: "An insurance document must cover the risks defined in the credit. Even though a credit may be explicit with regard to risks to be covered, there may be reference to exclusion clauses in the document. If a credit requires "all risks" coverage, this is satisfied by the presentation of an insurance document evidencing any "all risks" clause or notation, even if it is stated that certain risks are excluded. An insurance document indicating that it covers Institute Cargo Clauses (A) satisfies a condition in a credit calling for an "all risks" clause or notation".

Kind regards,
Mr. Old Man