ICC Digital Library Forum

Hi all,
if a credit calls for a insurance policy and a insurance certificate is presented, but the certificate fulfills all conditions of the L/C, would this be a discrepancy ?
Just for information: The bank would accept the same document only with a different title, the conditions mentioned on the document are the same.
I am looking forward to your suggestions.
regards
GerhardH

Gerhard,
This problem sometimes raises because of the wording in sub art 34 d of UCP which reads " if a credit specifically calls for an I/C ,banks will accept, in lieu of,
an I/P.

I consider that the ICC viewpoint is that the reason for the above provision is that to present something greater (Insurance Policy) than that requested (Insurance Certificate) should not be grounds for refusal.
There is a general recognition that an insurance policy is a document that encompasses all the terms and conditions relating to the shipment and is individual to that shipment. An insurance certificate, on the other hand, is a document that is issued out of the policy and is seen in some markets as being a lesser document.

Although it is not directly cited one must easily conclude that the converse of this provision also applies if an insurance certificate presented in spite of the specific requirement of "an insurance policy"it may not be acceptable.

In my opinion , I would accept any insurance doc which meets the requirements of the credit and applicable rules of UCP
irrespective of the titles "certificate or policy"

Regards,
Yahya

I do agree with Yahya too
Roland

Dear GerhardH

There is a topic under “General” titled ” Insurance policy / certificate” – First posting 20 dec 2005.
I think this may interest you.

Best regards
Kim

Nine days back, I was attending a seminar on UCP 600 and the issue of Insurance Certificate was raised. There was an inclination to support the view of Yahya. Nevertheless, no assurance was made that a nominated bank, issuing bank or applicant would not be able to refuse the presentation by quoting the UCP article on insurance document. In addition, the UCP, when referring to the insurance document, does not use its popular expressions such as "however named" to help in supporting someone's stand; therefore, as of now, it would not be prudent, for a bank, to unilaterally accept a certificate when an LC calls for a policy. Playing it safe is better than arguing it through.

best regards
Abdulkader
[edited 2/25/2007 10:23:32 AM]

It seems very unfair to me
The intention of the requirement for an insurance doc in a Credit operation is to secure goods during transportation and make a claim in case of a loss or a damage to goods .

I would not consider that an insurance certificate could preclude you from making a claim.
So it would be very difficult for a bank to justify a refusal just on the grounds that " certificate presented instead of policy"


Regards,
Yahya



[edited 2/26/2007 11:05:44 AM]

Yahya,

I'm sorry if my earlier posting sounds to be unfair. In principles I don't disagree with you; however, I want to avoid being in a vulnerable situation.

Best regards

Quite a few years ago, I was told that with a certificate, you can make a claim but just about that. But with a policy you also had some legal rights. Do not ask me which ones. And that would make the difference between the two documents.
Daniel

Dear Yahya,

I do not think that ”fairness” is the tool by which documentary credit examination is measured

I think that the main rule is that you should present what the credit calls for. This is – as we know – not limited to the title of the document. I have seen examples where the heading “insurance certificate” has been deleted and replaced by “insurance policy”. This did in my view not change the document into an insurance policy, as there were numerous references to an “open cover”.

The line “If a Credit specifically calls for an insurance certificate or a declaration under an open cover, banks will accept, in lieu thereof, an insurance policy” is an exception to the main rule. Therefore (at least under UCP 500) I would not think that an Insurance certificate would be acceptable when the credit called for an insurance policy.

Just for information: In ICC publication 511 “UCP 500 & 400 compared” it is said: “It is recognized that an insurance policy is a better and more complete insurance document than a certificate or a declaration under an open cover”.

That being said I would not mind if practice would change under UCP 600. Wonder what the insurance industry would think.

Best regards
Kim

[edited 2/27/2007 10:20:17 AM: 51 changed to 511]

Dear Kim,
I keep in my mind your "fairness" note

I still insist on my opinion that rejection of docs for such a reason would be groundless

As you said , the insurance industry may give a precise explanation for such a rejection not banks.

Regards,