Uncategorized INSURANCE POLICY VS INSURANCE CERTIFICATE By Mr Old Man Posted on April 9, 2015 4 min read 3 1 5,112 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr QUESTION Hi, In reply to a question regarding insurance policy and insurance certificate, you said: “Please note that if the LC requires an insurance certificate, an insurance policy presented is acceptable, but if the LC requires an insurance policy, an insurance certificate presented is not acceptable unless the LC provides that an insurance certificate issued under an open policy is acceptable” Please give me your foundation that your comment bases on. As far as I understand, UCP 600 just mention if the LC requires an insurance certificate, an insurance policy presented is acceptable but silent to the scenario ‘if the LC requires an insurance policy, an insurance certificate presented is not acceptable” Please help me clarify this matter. Thank you very much for spending your precious time. AN ——– ANSWER Hi, I would like to use the practice of insurance industry to explain the reason why an insurance policy is acceptable in lieu of an insurance certificate but not vice versa. An insurance policy is an insurance contract including terms and conditions based on which the insured or the assignee can claim compensation from the insurer, whereas an insurance certificate is evidence that the goods has been covered under a master policy. Therefore, the insured or the assignee who lodges a claim against the insurance company may be required to produce both the insurance certificate and the insurance policy. Just imagine that an insurance policy is a mother and that an insurance certificate is a baby. When the mother is required to be present, the mother should be present; her baby cannot represent her. However, the mother can represent her baby. Similarly, when an insurance policy is required, then insurance policy must be presented, no other document, including insurance certificate, is acceptable. However, an insurance policy can be acceptable in case an insurance certificate is required. UCP 600 sub-article 28 (d) states: “An insurance policy is acceptable in lieu of an insurance certificate or a declaration under an open cover. King -tak Fung, a banking partner of DLA Piper specializing in international trade law and practice, suggested ICC in his article “UCP 600 and insurance documents” published in DCInsight Vol. 14 No. 4 October – December 2008 that ICC should add “but not vice versa” at the end of sub-article 28 (d) to reflect this practice. Gary Collyer in his “Guide to Documentary Credit” Fourth Edition” (Chapter 7- Insurance documents) also shared the same view as King-tak Fung’s. Kind regards, Mr. Old Man P/s: I do not have time to look up ICC’s related opinions, but believe me that this truth has been known to all document checkers.