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INSURANCE COVER IS SUBJECT TO EXCESS

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QUESTION

Dear Mr. Old Man,

LC requires: Insurance Certificate in assignable form and endorsed in blank for 110 % of invoice value covering all risks showing CLAIM PAYABLE IN VIETNAM.

Insurance Certificate presented shows CLAIM PAYABLE IN VIETNAM EXCESS 0.5% OUT OF SUM INSURED.

Is the insurance certificate acceptable?

Thank you.

Best regards,

PTTM

————–

ANSWER

Hi,

Paragraph K14 ISBP 745 provides: “An insurance document may indicate that cover is subject to A FRANCHISE or EXCESS (DEDUCTIBLE) [emphasis added]. 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)”.

The insurance certificate in question is acceptable.

By the way, please click the following link to find out examples regarding the terms “franchise” and “excess” (deductible):

http://nhducdng.wordpress.com/2013/11/27/claims-payable-settling-agent-franchise-excess-deductible/

Kind regards,

Mr. Old Man

 

 

 

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2 Comments

  1. do

    July 28, 2014 at 11:50 am

    A oi, cho e hoi ve truong hop BH o tren. Theo e hieu thi L/C yeu cau la BH phai la 110% số tiền, nhưng câu cuối CLAIM..EXCESS 0.5% OUT OF SUM INSURED”, nghia la neu thiet hai duoi 0.5% cua 110% so tien invoice thi se ko duoc BH. Nhu vay theo ISBP 745, K14 duoc trich dan, thì ro rang l/C có “require to irrespective of percentage”, BH ko dc phep “stating a clause …an excess”. Vay BH tren ko dc chap nhan chu A? A co the vui long giai thich lai giup e duoc khong ạ? e cam on

    Reply

    • mroldman

      July 28, 2014 at 8:14 pm

      Nên hiểu K14 như sau: Nếu LC yêu cầu bảo hiểm bất kể tỷ lệ thì chứng từ bảo hiểm không được thể hiện điều khoản rằng bảo hiểm “subject to franchise or excess”.

      Tình huống câu hỏi cho thấy LC không yêu cầu bảo hiểm bất kể tỷ lệ, do vậy, chứng từ bảo hiểm thể hiện “claim subject to excess 0.5%…” là OK.

      Reply

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