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QUESTION FROM LY
Re: Insurance certificate
Dear Mr. Duc,
I know you are master of LC. Really admire you.
Hence, please kindly answer following questions relating to Insurance certificate in case price is the one does not include Insurance such as CFR…, and the Applicant buy insurance and submit Ins. Certificate to the Issuing Bank:
1) Can the date of Ins. Certificate is after the date of issuance of LC?
2) If there is the tolerance, Do we include the tolerance of the price on Ins. Certificate when we calculate 110% of invoice value?
3) Do we need the Applicant submit the receipt of payment for insurance along with Ins. Certificate to the Issuing Bank?
Your soon response is appreciated.
Thanks much
Ly
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ANSWER
Hi,
If the price is CFR, no insurance document is required.
My answer is based on the assumption that the price is CIF and the L/C requires a presentation of the insurance document.
1) Of course, the date of the insurance document can be later than the date issuance of the L/C. Yet, it must be no later than the date of shipment, unless it appears from the insurance document that the cover is effective from a date not later than the date of shipment.
2) No. The amount of insurance coverage must be calculated on the basis of the full gross value of the goods/invoice value.
3) No.
It is recognized that there are cases where the issuing bank is simultaneously the financing bank that would request the applicant to buy insurance for the goods imported at CFR or FOB price. At the time of application for opening L/C, the issuing/financing bank may request the applicant to present the application for insurance together with the insurance company's confirmation that they agree to issue the insurance policy/certificate at the applicant’s request upon receipt of shipment details (value of goods shipped, vessel name, shipment date …) and insurance premium from the applicant. When the documents required under the L/C are presented, the financing bank may also request the applicant to present the original insurance policy/certificate to ensure that the goods financed by them are under insurance. This issue is outside the L/C.
Hoping it’s helpful.
Best regards,
Mr. Old Man
