| As per the credit opened by the company Y, it required 2 copies of insurance certificate, insurance amount is 110% of the CIF amount, and prepare a order certificate in blank endorsement method to the debtor. But the presented insurance certificate was 2 copes of declaration issued by a underwriters. And the insurance amount was 120% of the CIF amount and not blank endorsement was made. So the company Y sent notice of payment protest declaring that a decoration was submitted instead of a insurance policy, the insurance amount doesn't conform with the credit term and that no bank endorsement was made.
Case study
1. Acceptable insurance documents
Insurance policy, Insurance certificate or a declaration under an open cover as a insurance documents can be accepted as a insurance documents but a simple cover note is not acceptable. (The Sub-Article 32(a,b,c) of U.C.P 500)
2. Discrepancy of Insurance collateral ratio
Actual submitted insurance document indicates 120$ of the CIF amount. For this, the I.C.C. states that if the credit requires 110% of the CIF amount, it is discrepancy to the credit terms whether it is 115% or 120% of the collateral ratio therefore, it can not be accepted. (I.C.C pub 459 case No.129).
4. Blank endorsement for insurance documents
If the credit required insurance certificate in blank, the order should be followed even though issuing insurance certificate in bearer is traditional custom, it should be rejected as it is discrepancy to the credit terms. (I.C.C pub 459 case No.128).
Conclusion
For this case, the declaration has no problem, but the 120% of insurance amount and not issuing a bank endorsement is clearly breaching the credit terms.
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