Insurance certificate

[cristiand969]

Dear all,
Pls help me to clarify the following issue:
An issued LC calls for among other documents " an insurance document in duplicate and in NEGOTIABLE FORM for ...etc"
Facts:
Two original certificates of insurance have been presented showing : ISSUED IN FAVOUR OF XXX (applicant).
.
How can be treated the wording IN NEGOTIABLE FORM in this case? I mean should the insurance document should contain the words "TO ORDER OR TO THE ORDER OF" like B/L and other financial instruments to be considered in negotiable form or such a document presented is OK.
From what I know there is a difference between insurance policy and other docs mentioned above as on one hand B/L and draft are intended that by endorsement to transfer right of property (goods or money) and on the other hand insurance policy is intended to transfer by endorsement the right of claims under the policy.
If you have some relevant or legal documentation in this respect pls do let me know.
Thanks in advance!
Regards
Cristian

[iLC]

dear cristain,

tricky question indeed. well, my limited understanding says that a insurance certificate is never negotiable. because the existence of a certificates of insurance is based on the existence of another document; that is insurance policy. the certificate of insurance does not have any terms and condition and merely refer to the insurance policy. so when a claim occurs, it first goes back to the insurance policy. due to this reason, a certificate of insurance is never negotiable but assignable. think in this way. a letter of credit which is not transferable can still be assignable.

whether a insurance policy should have the term "to the order" is a different story. i am sure what you try to mean by the term "applicant". is it the applicant of the credit or the insurance?

[shahriar]

i just found this today in FAQ and thought it might be helpful

28.18 ...whether it’s a must for the name of an assured party in an insurance document to have “to order” so as to make the document negotiable.
L/C terms:
- Insurance policy or certificate issued in negotiable form in two originals endorsed to the order of applicant, covering all risks,
Insurance policy:
- Assured: ABC Company Ltd.
- Endorsed by ABC Company Ltd to the order of the applicant.
L/C issuing bank is arguing that the insurance policy is not a negotiable form....a negotiable form would be the insurance showing assured “to order of ABC Company Ltd.” and endorsed by that party....

Suggested answer:

Technically, there is no such thing as a negotiable insurance document. An insurance document is a document that is issued in favour of an assured party who may then endorse the rights to claim thereunder to another party. ....“negotiable” only has relevance under a document of title. An insurance document that is issued in the manner ...described is acceptable ....