ICC Digital Library Forum

We have received a set of documents including an invoice showing:
+ total amount of goods shipped: USD11,000.00
+ discount amount: USD1,000.00
+ amount to be paid: USD10,000.00
.
So in your opinion, the insured amount on insurance document should be USD11,000.00 or USD12,100.00? Why?
.
Thank you for your prompt reply.

12.100.--
Daniel

A slightly longer response than Daniel's:

My answer is based exclusively on sub-Art 28(f)(ii), and does not take account of any credit conditions that might override it. It also assumes that the invoice is compliant.

28(f)(ii) requires that “If there is no indication in the credit of the insurance coverage required, the amount of insurance coverage must be at least 110% of the CIF or CIP value of the goods”. Thus, if the CIF or CIP value of the goods is USD11,000.00 the insurance must be for USD12,100.00 minimum. On the other hand, if the CIF or CIP value of the goods is USD10,000.00 the insurance must be for USD11,000.00 minimum.

However, 28(f)(ii) requires that if “the CIF or CIP value cannot be determined from the documents, the amount of insurance coverage must be calculated on the basis of the amount for which honour or negotiation is requested or the gross value of the goods as shown on the invoice, whichever is greater”.

If that is the case here, the amount for which honour or negotiation is requested is USD10,000 and the gross value of the goods would appear to be USD11,000. Therefore, as USD11,000 is more than USD10,000, the insurance must be calculated on the greater sum and thus be for USD12,100.00 minimum.

Dear,
ISBP Paragraph 178:
If it is apparent from the credit or from the documents that the final invoice amount only represents a certain part of the gross value of the goods (e.g., due to discounts,
pre-payments or the like, or because part of the value of the goods is to be paid at a later
date), the calculation of insurance cover must be based on the full gross value of the goods.
.
Hence minimum 110% of 11000
.

[edited 8/17/2011 4:05:45 AM]

Sorry for not elaborating
Regards
Daniel

I am not so sure.

The previous answers assume that the gross value is $11k but I can see no justification for this. What is the definition of gross value in UCP or the LC? There is certainly no such definition in UCP and I doubt very much there is one in the LC either.

What if the bene revises their invoice to omit the discount and simply show the CIF value as $10k? In my opinion the 'gross value' is the same in both instances - $10k.

I am assuming that the LC does not have a unit price. If it does, then there is no doubt that the gross value is $11k and the insurance value should be $12.1k.

Gross value: see ISBP 178
Rgds
Daniel