Uncategorized INSURANCE DOCUMENT ISSUED TO ORDER By Mr Old Man Posted on June 3, 2015 5 min read 19 0 5,286 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Dear Mr. Old Man, I am a newcomer at a forwarding company. I have a question for you: LC issued by SHINHAN BANK SEOUL stipulates: “Full set of marine insurance policy or certificate endorsed in blank for 110 % of invoice value with claims payable in Korea in the currency of draft, covering the institute cargo clauses.” The beneficiary requests the insurance company to issue an insurance policy that indicates the assured party as “TO THE ORDER OF SHINHAN BANK SEOUL”. Is the beneficiary correct? Is it true that all insurance documents required under LCs must be issued to order? Could you please explain to me why an insurance policy needs to be endorsed in blank? As far as I know, unlike a bill of lading, an insurance policy/certificate is not a document of title that is transferrable by endorsement. Thanking you for reading my mail and looking forward to your answer. Best regards, NA —————- ANSWER Hi, According to the LC’s requirement, the beneficiary is correct in insisting an insurance document that indicates the assured party as “SHINHAN BANK SEOUL” or “TO THE ORDER OF SHINHAN BANK SEOUL”. However, he should not so insist. What if the issuing bank refuses the documents (due to discrepancies) and returns the documents? It would not endorse the insurance document back to the beneficiary. Under CIF terms, the assured party to be indicated in the insurance document would be the seller that buys insurance for his goods. To comply with the LC requirement, the insurance policy/certificate in this case will indicate the beneficiary as the assured party who will endorse the insurance policy/certificate in blank. It’s true that an insurance policy/certificate is not a document of title. Some experts say an insurance policy/certificate is a quasi-negotiable document, i.e., not really a negotiable document. It is encouraged by ICC that insurance policy/certificate should not be issued “to order”. However, in practice, insurance companies still issue “to order” insurance policy/certificate at the request of the assured and such insurance policies/certificates are acceptable. It is not true that insurance documents under LCs are required to be issued to order. A common requirement for presentation of insurance policy/certificate would be as follows: “Insurance Policy/certificate IN ASSIGNABLE FORM AND ENDORSED IN BLANK for 110% of invoice value covering all risks …” Under CIF terms the risk transfer point from the seller/beneficiary to the buyer/applicant is when the goods have been loaded on board. The fact that the insured/beneficiary endorses the insurance policy/certificate in blank is to assign the right to claim compensation under the insurance policy/certificate to the buyer/applicant or to the holder in due course. Kind regards, Mr. Old Man
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?
IS THE NOMINATED BANK REQUIRED TO VERIFY WHETHER THE BENEFICIARY HAS AUTHORIZED THE PRESENTING BANK TO PRESENT THE DOCUMENTS?