WHERE LC REQUIRES INSURANCE DOCUMENT TO BE ISSUED TO THE ORDER OF THE ISSUING BANK

QUESTION

Can anyone clarify my doubt regegarding insurance document?

LC calls for insurance document to be issued to the order of issuing bank in negotiable form.

Insurance policy presented shows assured as beneficiary and blank endorsed. In the bottom of the document along with other clause states to order of issuing bank.

Is this discrepancy?

Divya

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ANSWER

Dear Divya,

For your convenience, below is ISBP 745 paragraph K20:

“a. A credit should not require an insurance document to be issued “to bearer”, or “to order”. A credit should indicate the name of an insured party.

b. When a credit requires an insurance document to be issued “to order of (named entity)” the document need not indicate “to order” provided that the named entity is shown as the insured party or claims are payable to it, and assignment by endorsement is not expressly prohibited”.

In this case, the insurance document endorsed to (the order of) the issuing bank or to bearer (in blank) is acceptable.

Kind regards,

Nguyen Huu Duc

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P/s:  The Q&A is quoted from CDCS-letter of credit linkedin.com