Is the Insurance Certificate in Assignable Form Acceptable?

QUESTION

Dear Mr. Old Man,

LC calls for full set of insurance certificates in negotiable form, covering ICC(A) for 110% of invoice value.

• Beneficiary: ABC Co. Ltd
• Issuing Bank: HSBC Dubai

The presented insurance certificate shows the Assured as ABC Co. Ltd.

It is endorsed with a stamp and signature of ABC Co. Ltd, and the endorsement reads:

“To the order of HSBC Dubai”

That means the insurance is not blank endorsed but specifically endorsed to the order of the issuing bank.

Is this acceptable as a negotiable document?

In my view, this is acceptable since HSBC Dubai (the issuing bank) can further endorse it to the applicant.

Regards,

Rohini

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ANSWER

Hi Rohini,

Thanks for your clear question. Here’s how I understand the situation:

• The LC requires an insurance certificate in negotiable form.
• The presented insurance document shows the assured as the beneficiary – ABC Co. Ltd.
• The document is endorsed by the beneficiary to the order of HSBC Dubai, the issuing bank.
• You are asking whether this satisfies the requirement for a negotiable document.

Let me clarify:

Technically, the correct term in this context should be assignable form, not “negotiable form”.

Insurance documents are generally not negotiable in the same way as bills of exchange or bills of lading. They are assignable, meaning the rights under the policy can be transferred via endorsement.

According to ISBP 821, paragraph K21(a):

When a credit is silent as to the insured party, an insurance document must not evidence that claims are payable to the order of, or in favor of, the beneficiary or any entity other than the issuing bank or applicant, unless it is endorsed in blank or in favor of the issuing bank or applicant.

In your case, the insurance certificate names ABC Co. Ltd as the assured and is endorsed to the order of HSBC Dubai. This is fully compliant with ISBP 821 guidance, since:

• The credit is silent about the insured party (we assume).
• The document is not payable to the beneficiary directly.
• It is properly endorsed to the issuing bank, which can then assign it to the applicant.

Conclusion:

Yes, the endorsement “to the order of HSBC Dubai” is acceptable.

The insurance certificate is in assignable form, and the issuing bank may further endorse it to the applicant.

Best regards,

Mr. Old Man