What is a cargo insurance certificate?

What is a cargo insurance certificate?

What is a cargo insurance certificate?

In some cases, exporters or importers do not prefer to make insurance for each shipment separately, but they sign an insurance cover for a certain period of time such as 1 year.

During the insurance period exporter’s all shipments will be covered with a cargo insurance. Periodic insurance contracts are also known as open cover.

In case the exporter, whom uses an open cover insurance, needs an insurance document for a specific shipment, then insurance company issues an insurance certificate.

Insurance certificates are not issued as a stand alone insurance document for a specific shipment, but they are issued under an open cover.

Both insurance policy and insurance certificate should be issued by an insurance company or an underwriter.

Both documents should state identical information such as:

• Insurance terms and additional risks covered
• Amount of insurance premium
• Shipment details such as port of loading, port of discharge, vessel name and voyage number, description of goods etc.
• Currency of the insurance cover
• Insurance cover amount
• Insurance company’s agent at the port of destination
• Procedures for the claim and required documents

What is the difference between insurance policy and insurance certificate?

May be the only difference between insurance policy and insurance certificate occurs under letter of credit payments. According to L/C rules, an insurance policy is acceptable in lieu of an insurance certificate or a declaration under an open cover. But reverse situation is not valid.

As a result, if you are not dealing with a letter of credit there would be no difference between an insurance policy and insurance certificate.

If you will be presenting documents under a letter of credit, then you should keep in mind that you can present insurance policy instead of an insurance certificate. But you cannot present an insurance certificate instead of an insurance policy under a letter of credit.

You can learn more about international trade, export and import, from the Intradebook blog: https://blog.intradebook.com/en/

Image: Compass Insurance