What a bank checks on your insurance document

Under a documentary credit, the certificate is not just evidence of cover — it is a document the bank examines. A discrepancy stops payment, which makes this the one place where the exact form of a certificate has an immediate cash consequence.

UCP 600 Article 28110% of CIF or CIPNo cover notes

The checks, in the order a document examiner makes them

  1. 1

    Issued and signed by an insurer or underwriter

    The document must appear to be issued and signed by an insurance company, an underwriter or their agent or proxy. Where an agent or proxy signs, it must be clear whether they sign for the insurer or for the underwriter.

  2. 2

    Not a cover note

    Cover notes are not acceptable. An insurance policy is acceptable in place of an insurance certificate or a declaration under an open cover.

  3. 3

    All originals presented

    If the document indicates it has been issued in more than one original, all originals must be presented.

  4. 4

    Dated no later than shipment

    The date of the document must be no later than the date of shipment, unless it appears from the document that the cover is effective from a date not later than shipment.

  5. 5

    Amount and currency

    The document must indicate the amount of insurance cover and be in the same currency as the credit.

  6. 6

    At least 110%

    Where the credit says nothing about the amount required, the cover must be at least 110% of the CIF or CIP value of the goods. Where that value cannot be determined from the documents, it is calculated on the amount for which honour or negotiation is requested, or on the gross value of the goods on the invoice, whichever is greater.

  7. 7

    Covers the right journey

    The document must indicate that risks are covered at least between the place of taking in charge or shipment and the place of discharge or final destination stated in the credit.

  8. 8

    Risks as specified

    A credit should state the risks required. Terms such as "usual risks" or "customary risks" are accepted as they stand, without the bank examining what was left out — which is a reason to specify the clause level rather than rely on the phrase.

The discrepancies that come up most

  • A cover note presented instead of a certificate or policy.
  • Cover in a different currency from the credit.
  • An amount below 110% where the credit was silent.
  • A document dated after the shipment date with no earlier effective date shown.
  • Cover that stops at the discharge port when the credit names an inland final destination.
  • Only one original presented where the document says two were issued.

Specify the clause level in the credit

Article 28 says a credit should state the risks to be covered, and that vague terms such as "usual risks" are accepted as presented. That is convenient for the bank and dangerous for the buyer: a document reading "usual risks" can sit on Clauses (C), which does not respond to theft, non-delivery or handling damage.

Name the clause level, the war and strikes clauses, and the destination. Under CIF the Incoterms minimum is only Clauses (C); the credit is where you ask for more.

What CIF actually obliges →

Common questions

What insurance document does a letter of credit require?
One that appears to be issued and signed by an insurance company, an underwriter, or their agent or proxy. Under UCP 600 Article 28 a cover note is not acceptable, and a policy is acceptable in place of a certificate or a declaration under an open cover.
Why 110%?
It is the default in UCP 600 Article 28 where the credit does not state an amount, and it matches the Incoterms 2020 requirement for CIF and CIP. The extra 10% is the customary allowance for the incidental costs a loss creates.
Can the insurance document be dated after the shipment date?
Not unless it shows on its face that cover is effective from a date no later than shipment. Otherwise the bank will treat it as a discrepancy.
What does "blank endorsed" mean on a credit?
That the certificate must be endorsed on the reverse without naming a transferee, so the benefit of the cover passes to whoever holds it. It is what lets the right to claim travel with the documents through a sale chain.
What a certificate shows UCP 600 in the glossary

Sources

UCP 600 is an ICC publication. This page summarises what Article 28 requires of an insurance document; the publication is the rule, and the bank's own examination practice applies alongside it.

This page summarises the instruments above. It is not the wording, and it is not legal advice. Where a summary conflicts with a convention text, a policy wording or a certificate, that document governs.

InsuranceScanner is an insurance intermediary, not an insurer — see the Terms for our role. Nothing here is a personal recommendation that a particular cover, sum insured or deductible is suitable for you. Where anything on this page conflicts with the certificate, policy schedule or wording issued by an insurer, that document governs.