WHETHER A DUPLICATE INSURANCE DOCUMENT IS TREATED AS AN ORIGINAL

QUESTION

Dear Mr. Old Man,

So sorry to keep asking your opinion of these matters sir but can you please give me any suggestions when an applicant requests a duplicate insurance policy in the LC itself.

So my question is:

Is duplicate insurance policy even valid and can be used to make claims if need be?

What about the original policy and who owns it in this scenario?

Can both original duplicate policies be claimed…?

Best regards,

Shrestha

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ANSWER

Hi,

According to ICC Opinion TA. 784rev, a duplicate may be a copy or an original insurance policy. If an issuing bank or applicant requires two originals of an insurance policy, and so as to avoid any potential ambiguity, a credit should require the presentation of the document in “two originals” as opposed to an “original and duplicate” or “in duplicate”.

The above opinion seems to imply that a duplicate insurance document is not treated as an original.

However, experts also have different opinions on this issue. Some advocate the view that if the LC requires the presentation of insurance documents in 2 originals, the beneficiary must present 2 originals, presenting one original and one duplicate is non-compliant, while others advocate the view that a duplicate insurance document should be considered as an  original.

Maybe I am wrong, but I am of the view that the insurance document marked duplicate should be treated as an original unless there is specific indication in the document which suggests otherwise.  My view is based on ISBP 821 paragraph A28 which states, “”Documents issued in more than one original may be marked “Original”, “Duplicate”, “Triplicate”, “First Original”, “Second Original”, etc. None of these markings will disqualify a document as an original.”

ICC Mexico commented on the Opinion of ICC TA.784rev and stated that they disagreed with the Opinion of ICC TA.784rev, believing that the original and the duplicate of the insurance document were the same, therefore the duplicate should be treated as an original.

According to ISBP 821 K8, when an LC requires the insurance document to be issued in more than one original, or when the insurance document indicates that it has been issued in more than one original, all originals are to be presented and are to appear to have been signed.

This provision is intended to avoid the situation where another original insurance is sent directly to the applicant or another party, which may cause the issuing bank to lose its right to claim under the insurance document (assuming that the applicant made claim under another original insurance document). Therefore, if the LC requires presentation of insurance document in one original and one duplicate, two originals or one original and one duplicate of the insurance document must be presented to the issuing bank.

I posed a similar question to the editors of TRADE SERVICES UPDATE Volume 12, Issue 3, May – June 2010 and there were different opinions on this issue. You can refer to them here:

QUESTIONS REGARDING INSURANCE DOCUMENTS – MR. OLD MAN

Happy New Year!

Best regards,

Mr. Old Man