INSURANCE COVERED BY THE BENEFICIARY; CERTIFICATE IS TO BE SIGNED

QUESTION

Dear Mr. Old Man,

We will appreciate your prompt answer to the following questions:

Question 1:

– LC stipulates:

Insurance covered by the beneficiary.

Insurance certificate in assignable form and blank endorsed  covering all risks  for 110pct of invoice value showing claim payable by settling Agent with full address in Vietnam in invoice currency in full set.

– Presented Insurance Certificate shows: “Assured: To Order of Bank X”

Can we raise the discrepancy “Insurance not covered by the beneficiary”?

Question 2:

LC requires “Quality Certificate issued by the beneficiary”

Presented Quality Certificate was issued on the beneficiary’s letterhead but not signed by the beneficiary.

Can we raise the discrepancy “Quality Certificate not signed”?

Thank you in advance.

Best regards,

PA

————–

ANSWER

Hi,

1) The phrase “Insurance covered by the beneficiary” means that the beneficiary  is required to obtain insurance for the goods while in transit to the port of destination.

The fact that the beneficiary presents the insurance certificate as required is deemed to have satisfied the requirement. You cannot raise the discrepancy “Insurance not covered by the beneficiary” because of the insurance certificate showing the assured as “To Order of Bank X”.

By the way, I would like to draw your attention to ISBP 745 paragraph K21, which says: “When a credit is silent as to the insured party, an insurance document is not to evidence that claims are payable to the order of, or in favour of, the beneficiary or any entity other than the issuing bank or applicant, unless it is endorsed by the beneficiary or that entity in blank or in favour of the issuing bank or applicant”.

2) According to ISBP 745 paragraph A3, when a certificate, certification, declaration or statement is required by a credit, it is to be SIGNED.

Please also refer to paragraph Q1, which says “ When a credit requires the presentation of such a certificate, this will be satisfied by the presentation of a SIGNED document …”

You can raise the discrepancy “Quality Certificate not signed”.

Kind regards,

Mr. Old Man

Kind regards,

Mr. Old Man