Assignment of Marine Policy — Transfer of Claim Rights and Requirements
Interlink編集部What Is Assignment of Marine Policy?
Assignment of Marine Policy means the transfer of a marine insurance policy or rights under a marine insurance contract to another party.
In marine cargo insurance, a policy arranged by the seller may be transferred to the buyer, an intermediary, or the final buyer in transactions involving CIF terms, CIP terms, L/C payment, triangle trade, or a Switch B/L.
In such cases, an endorsement on the insurance policy or another method of assignment may be used to clarify who will be entitled to make an insurance claim if a loss occurs.
However, possession of the insurance policy, the existence of an endorsement, or an agreement between the parties to make an assignment does not automatically establish entitlement to insurance proceeds.
For an insurance claim, it is necessary to determine separately whether the policy or contractual rights were validly assigned, who held the insurable interest when the loss occurred, whether the assignor had an existing claim against the insurer, and whether the insurance terms contain any restriction on assignment.
Scope of This Article
| Item | Covered in This Article | Covered in Other Articles |
|---|---|---|
| Basic structure of assignment | The meaning and effect of transferring a marine insurance policy or rights under a marine insurance contract | This is the principal subject of this article |
| Marine Insurance Act 1906 | The basic principles of Sections 50 and 51 relating to assignment | The wider structure of English marine insurance law is covered in the articles on English Marine Insurance Law and Clause Interpretation |
| Insurable interest | Why assignment and insurable interest at the time of loss must be examined separately | The nature and requirements of insurable interest are covered in “Insurable Interest” |
| Endorsement of an insurance policy | How an endorsement may serve as a method of recording or effecting an assignment | Blank endorsements, endorsements to a named party, and endorsement wording are covered in “What Is Endorsement of a Marine Insurance Policy?” |
| Difference from a B/L | Why the transfer of rights under a B/L and the transfer of rights under an insurance contract are separate legal matters | Combinations of names are covered in “Names on Insurance Policy and Bill of Lading” |
| CIF and CIP terms | The flow of policies and insurance rights where the seller-arranged insurance is intended for the buyer | Risk transfer and claim rights under CIF are covered in “CIF and the Gap Between Risk Transfer and Insurance Claim Right” |
| L/C payment | Why compliance with documentary credit conditions and entitlement to claim insurance proceeds are separate matters | Bank examination of insurance documents is covered in “Letter of Credit and Insurance Policy” |
| Triangle trade | Misalignment among the exporter, intermediary, and final buyer concerning the policy, insured value, and claim rights | Switch B/L procedures are covered in “Switch Bill of Lading and Triangle Trade Insurance Risk” |
| Increased Value Insurance | Why assignment alone may not cover the intermediary’s profit or the final sales price | Cover for the increased value is addressed in “Insurance Covering Contingent Interests” and related articles |
| Assignment after loss | Points to confirm when an existing insurance claim is transferred after a loss has occurred | Perfection and enforceability of an assignment of a claim must be confirmed under the applicable law |
Why Assignment Is Required
The sale of cargo, the transfer of risk under the sale contract, rights relating to cargo delivery under a B/L, and rights under a marine insurance contract are separate legal relationships even when they concern the same cargo.
For example, under CIF terms, the seller arranges marine insurance, but the buyer may bear the economic loss if cargo damage occurs after risk has transferred to the buyer.
In that situation, an endorsement of the insurance policy or an assignment may be required so that the buyer can use the seller-arranged insurance when making a claim.
By contrast, the transfer of ownership, contractual risk, or rights under a B/L does not necessarily result in the automatic transfer of rights under the marine insurance contract. The governing law, insurance policy, insurance terms, and agreement between the parties must be examined.
Five Legal Relationships That Must Be Distinguished
| Classification | Subject Matter | Main Documents to Review | Relationship with Assignment | Risk of Confusion |
|---|---|---|---|---|
| Ownership of the cargo | The legal position of the owner of the cargo | Sale contract, Invoice, and retention-of-title provisions | A transfer of ownership does not necessarily transfer rights under the insurance contract | The owner may incorrectly assume that ownership alone establishes entitlement to claim |
| Risk under the sale contract | The party that bears the economic consequences of cargo loss or damage | Sale contract, Incoterms, and specific agreements | This is an important factor in determining insurable interest at the time of loss | The party arranging insurance may be confused with the party bearing the loss |
| Rights under the B/L | Contractual status relating to carriage, cargo delivery, and disposal of the cargo | Original B/L, endorsement, and Consignee field | Transfer of a B/L and assignment of an insurance policy must be considered separately | A B/L endorsement may be wrongly assumed to transfer the insurance claim as well |
| Rights under the marine insurance policy | Rights under the policy and insurance contract | Insurance policy, endorsement, assignment agreement, and insurance terms | This is the principal subject of this article | Possession of the policy may be wrongly treated as conclusive evidence of assignment |
| Existing insurance claim | A claim against the insurer that has arisen after a loss | Loss documents, Claim Form, assignment agreement, and insurer confirmation | This is treated as an assignment after loss | A party may attempt to assign a claim that never validly arose |
Relationship with the Marine Insurance Act 1906
Assignment of Marine Policy is often explained by reference to Sections 50 and 51 of the Marine Insurance Act 1906.
| Provision | Basic Rule | Practical Meaning | Point of Attention |
|---|---|---|---|
| Section 5 | A person may have an insurable interest where that person has a legal or equitable relationship to the marine adventure or insured property and benefits from its safety or suffers prejudice from its loss | The economic relationship to the loss must be examined rather than policy possession alone | The existence of insurable interest depends on the contract and actual transaction structure |
| Section 6 | The assured must generally have an insurable interest at the time of loss | The relevant position at the time of the casualty must be confirmed | Assignment alone does not retrospectively create an insurable interest |
| Section 50(1) | A marine policy is assignable unless it contains terms expressly prohibiting assignment | The policy and insurance terms must first be checked for assignment restrictions | A different governing law or specific insurance terms may produce a different result |
| Section 50(1) | A marine policy may be assigned either before or after loss | Assignment before loss and transfer of an existing claim after loss must be distinguished | The required documents and legal effects differ |
| Section 50(2) | A marine policy may be assigned by endorsement on the policy or in another customary manner | Endorsement is one common method of effecting an assignment | Not every endorsement necessarily constitutes an assignment |
| Section 51 | Restrictions may apply where the assured has parted with the insured interest and later attempts to assign the policy without a prior or contemporaneous agreement to assign | Transferring the policy only after disposing of the cargo interest may be ineffective | Assignment after loss is treated separately under Section 51 |
Where the Marine Insurance Act 1906 does not govern the insurance contract, the same conclusions cannot automatically be assumed. The governing law of the insurance policy, any prohibition on assignment, the insurer’s procedures, and the relevant law on assignment of claims must be confirmed.
Main Situations in Which Assignment Is Used
| Situation | Main Parties | Reason Assignment May Be Required | Main Points to Confirm |
|---|---|---|---|
| CIF terms | Seller, buyer, and insurer | To allow the buyer to use seller-arranged insurance after risk has transferred | Risk transfer, insurable interest, endorsement, and delivery of the policy |
| CIP terms | Seller, buyer, and insurer | To make the seller-arranged insurance available for a loss borne by the buyer | Point of risk transfer, insured transit, Assured, and coverage terms |
| L/C payment | Exporter, importer, banks, and insurer | To present an assignable insurance document complying with the credit | Blank endorsement, insured amount, issue date, and L/C conditions |
| Triangle trade | Original exporter, intermediary, and final buyer | To transfer insurance rights consistently with multiple sale contracts | Each sales price, insurable interest, insured amount, and Increased Value Insurance |
| Switch B/L | Exporter, intermediary, final buyer, and NVOCC | To maintain consistency between the revised B/L and the insurance documentation | Assured, Invoice, insured amount, and policy description |
| Transfer to a financial institution | Assured, bank, and financing institution | To arrange receipt of insurance proceeds in accordance with financing or security arrangements | Security interest, Loss Payee, assignment, and insurer confirmation |
| Assignment of a claim after loss | Assignor, assignee, and insurer | To change the ownership or payment destination of an existing insurance claim | Scope of assignment, notice, perfection, and prevention of duplicate claims |
Situations That Assignment Alone Does Not Resolve
| Situation | Why Assignment Is Insufficient | Additional Matters to Confirm | Main Response |
|---|---|---|---|
| The assignor had no insurable interest | Assignment does not create an insurance claim that never validly arose | Economic loss and contractual relationships at the time of loss | Reassess the existence of insurable interest |
| The policy prohibits assignment | An agreement between the parties may not be enforceable against the insurer | Assignment terms in the policy and insurance conditions | Confirm insurer consent or amendment of the policy |
| The original insured amount is insufficient | Assignment does not increase the insured value or policy limit | Final sales price, intermediary profit, and insurable value | Consider Increased Value Insurance |
| The cargo was damaged by an excluded cause | Assignment does not change the scope of cover or policy exclusions | Applicable Clause, exclusions, and cause of loss | Compare the cause of loss with the insurance terms |
| The insurance document does not comply with the L/C | A valid insurance assignment may still be rejected as a banking document | L/C conditions, UCP600, and presented documents | Correct the document before presentation |
| The assignee has no right to obtain cargo delivery | Assignment of the policy does not confer rights to delivery of the cargo | Original B/L, Sea Waybill, D/O, and Consignee | Review the transport documents separately |
| The Switch B/L conflicts with the insurance documents | Replacing the B/L does not change the Assured or insured amount under the policy | Original and switched B/Ls, Invoice, insurance policy, and Increased Value Insurance | Review the entire document set together |
Difference between Policy Endorsement and Assignment
Endorsement of an insurance policy and Assignment of Marine Policy are closely connected, but they are not identical concepts.
An endorsement is the act of adding wording or a signature to the insurance policy to record the intention to transfer or identify the transferee. Assignment is the legal or contractual act by which rights under the marine insurance policy or insurance contract are transferred.
| Item | Endorsement of an Insurance Policy | Assignment of Marine Policy | Practical Relationship |
|---|---|---|---|
| Core meaning | An act of adding wording or a signature to the policy | An act transferring the policy or rights under the insurance contract | An endorsement may be the method used to effect an assignment |
| Subject matter | Primarily the insurance policy | The insurance policy or rights under the insurance contract | A separate assignment agreement may also be used |
| Blank endorsement | The assignee may not be specifically named | The transferred rights and assignee may still need to be identified separately | Documentary compliance under an L/C must be distinguished from actual claim entitlement |
| Legal effect | The wording alone may not conclusively determine the legal effect | The effect depends on the governing law, insurance terms, and intention of the parties | Form and substance must be examined together |
| Insurable interest | An endorsement does not itself create insurable interest | An assignment does not necessarily create retrospective insurable interest | The sale contract and transfer of risk must be reviewed |
| Main article | “What Is Endorsement of a Marine Insurance Policy?” | This article | Each article refers to the other for its distinct subject |
Difference between a B/L and a Marine Insurance Policy
| Item | B/L | Marine Insurance Policy | Assignment Point |
|---|---|---|---|
| Main function | Evidence of the contract of carriage, receipt or shipment of cargo, and a document relating to cargo delivery | Evidence of the insurance contract and a document used in an insurance claim | The documents have different functions even when they concern the same cargo |
| Rights affected by endorsement | Rights under a transferable B/L | Rights under the insurance policy or insurance contract | Endorsement of one document does not automatically transfer rights under the other |
| Possession of the original | May be critical to cargo release | May be required as evidence or as a claims document | Possession alone does not necessarily establish entitlement to insurance proceeds |
| Economic interest | Possession of a B/L is not the same as holding an insurable interest | Insurable interest at the time of loss is important | Document possession and economic loss must be distinguished |
| Main party to contact | shipping line, NVOCC, bank, or shipper | Insurer, insurance agent, or assured | The appropriate party must be contacted for each issue |
Assignment before Loss and Assignment after Loss
| Item | Assignment before Loss | Assignment after Loss | Practical Point |
|---|---|---|---|
| Main purpose | To arrange for the assignee to exercise rights under the insurance contract if a future loss occurs | To change the ownership or payment destination of an insurance claim that has already arisen | The transferred rights differ even though both are described as assignments |
| Main review stage | Sale contract, insurance application, policy issue, and policy delivery | Time of loss and execution of the assignment agreement | Pre-loss and post-loss procedures must not be confused |
| Insurable interest | Confirm who is expected to hold the insurable interest when a future loss occurs | Confirm whether the assignor held the insurable interest when the loss occurred | Assignment to the assignee does not necessarily operate retrospectively |
| Main documents | Sale contract, policy, endorsement, Invoice, and B/L | Loss documents, Claim Form, assignment agreement, and payment instruction | Prepare different document sets for each situation |
| Typical problem | The transfer of risk and the flow of the insurance policy are inconsistent | The assigned claim, notice, perfection, or prevention of duplicate claims is unclear | Consult the insurer at an early stage |
| Confirmation with the insurer | Assignment restrictions, endorsement method, and Assured description | Assignment documents, notice, payment destination, and scope of claim | Consent is not always required, so the policy terms and governing law must be checked |
Assignment under CIF and CIP Terms
Under CIF and CIP terms, the seller arranges cargo insurance, while the risk of cargo loss or damage transfers to the buyer at the specified point.
As a result, the person applying for insurance, the person paying the premium, the Assured named in the policy, the party bearing the economic loss, and the person making the insurance claim may not be the same.
Where the seller transfers the insurance policy to the buyer, the parties must confirm the endorsement or assignment, the buyer’s insurable interest, the point of risk transfer, and the applicable insurance conditions.
The fact that the seller arranged the insurance does not necessarily make the seller the only person entitled to claim after the loss. Conversely, the buyer does not obtain an unconditional right to claim merely by receiving the insurance policy.
Points of Attention in L/C Payment
In an L/C transaction, the bank examines whether the issuer, issue date, insured amount, currency, coverage, endorsement, and presentation of the insurance policy comply with the credit terms.
However, the bank’s documentary examination and the insurer’s examination of an insurance claim after a loss are separate procedures.
Even where a blank endorsement complies with the L/C, the insurer may still examine insurable interest at the time of loss, the party bearing the loss, validity of the assignment, whether the loss is covered, and applicable policy exclusions.
An endorsement should therefore not be made solely to satisfy the documentary conditions of the L/C. The parties should also identify who is expected to make the insurance claim if a loss occurs.
Triangle Trade and Increased Value Insurance
In triangle trade, several sale contracts exist among the original exporter, intermediary, and final buyer. Assignment of the original insurance policy alone may therefore be insufficient to complete the insurance structure.
Where the insurance arranged by the original exporter is based on the sales price between the original exporter and the intermediary, the intermediary’s profit or the difference between that price and the final sales price may not be fully covered.
Assignment of the original policy to the final buyer does not automatically increase the insured amount or insurable value. Increased Value Insurance or another additional insurance arrangement should be considered for the uncovered difference.
Where the original insurance and Increased Value Insurance are arranged with different insurers, the coverage conditions, exclusions, survey arrangements, loss calculation, claims payment, and subrogation policies may differ. The increased value should therefore be considered when the original insurance is first arranged.
Relationship with a Switch B/L
Changing the Shipper, Consignee, or other descriptions through a Switch B/L does not automatically change the Assured, insured amount, assignment, or insurable interest under the insurance policy.
Even where the intermediary is shown as the Shipper on the switched B/L, the insurance policy may continue to show the original exporter, the original Invoice value, or other information revealing the original transaction.
Where a Switch B/L is used, the parties should review the original and switched B/Ls together with the insurance policy, Invoice, Increased Value Insurance, and the identity of the intended insurance claimant.
Freight Forwarder Involvement under the Standard Five Classifications
The five classifications used in this article are not established by law or industry-wide consensus. They serve as an analytical framework within this series to clarify the scope of freight forwarder involvement.
| Standard Five Classifications | Possible Involvement in Assignment | Roles Normally Not Assumed | Documents Used to Determine Responsibility | Practical Point |
|---|---|---|---|---|
| Simple Intermediary | Transmitting the insurance policy or assisting communication with the insurer or bank | Guaranteeing the legal validity of the assignment or payment of insurance proceeds | Instruction emails, quotation, and operational instructions | Distinguish transmission of documents from legal advice |
| Cargo Transportation Service Provider | Transmitting insurance documents and communications incidental to the transport arrangement | Transferring insurance rights where no such authority was granted | Transport contract, terms, and insurance arrangement instructions | Separate the scope of transport services from the scope of insurance services |
| NVOCC / House B/L Issuer | Checking consistency between the House B/L and cargo descriptions or names in the insurance policy | Guaranteeing insurance claim rights merely because it issued the House B/L | House B/L, insurance policy, Invoice, and instructions | Do not confuse status under the B/L with status under the insurance contract |
| Door-to-Door Single Contractor | Coordinating insurance arrangements and document procedures incidental to the integrated transport | Providing an unlimited guarantee of all parties’ insurable interests or insurance claims | Integrated contract, quotation terms, and insurance arrangement terms | Legal validity of an assignment must still be confirmed separately |
| Agent / Coordinator for Specific Operations | Requesting endorsements, sending policies, or making specific inquiries to the insurer | Designing unrequested Increased Value Insurance, giving legal advice, or assigning a claim | Specific mandate, emails, and operational instructions | Clearly define the scope of the assigned operation |
Contracting Carrier and Actual Carrier are legal or contractual status concepts and do not replace the Standard Five Classifications used in this article.
Practical operations such as sending an insurance policy, requesting an endorsement, issuing a B/L, checking an Invoice, or communicating with an insurer do not by themselves constitute a sixth classification.
Cases That Commonly Cause Practical Problems
| Case | Main Cause | Documents to Check | Key Judgment Point | Initial Response |
|---|---|---|---|---|
| A policy was delivered to the buyer under CIF terms, but the endorsement was insufficient | The parties assumed that physical delivery of the policy completed the assignment | Insurance policy, endorsement, sale contract, and L/C | Whether the buyer acquired rights under the insurance contract | Ask the insurer whether correction or additional documents are required |
| The B/L was endorsed, but the policy remained in the seller’s name | Transfer of B/L rights was confused with assignment of the insurance policy | B/L, insurance policy, Invoice, and sale contract | Rights to cargo delivery and rights to insurance proceeds must be examined separately | Confirm whether the insurance policy was validly assigned |
| The insurance document complied with the L/C, but the insurance claim was delayed | The bank’s documentary examination was treated as equivalent to the insurer’s claim examination | L/C, insurance policy, Claim Form, and loss documents | Insurable interest and the correct claimant at the time of loss | Identify the party bearing the loss and prepare the assignment documents |
| The insured amount was insufficient in a triangle trade | The intermediary’s profit or the final sales price was not reflected in the original insurance | Each Invoice, insurance policy, and sale contract | The value actually covered by the original insurance | Confirm whether Increased Value Insurance was arranged or can respond |
| The original insurer and the increased value insurer applied different loss assessments | Different insurers, Clauses, or adjustment methods were used | Each insurance policy, insurance terms, and Survey Report | Which part of the loss is payable under each policy | Establish an early coordination channel between the insurers |
| The descriptions in the Switch B/L conflicted with the insurance policy | Only the B/L was replaced and the insurance documents were not reviewed | Original and switched B/Ls, insurance policy, and each Invoice | Consistency of the claimant and insured amount | Reconcile the entire document set before a loss occurs |
| A claim was assigned after loss, but the payment destination was unclear | The assigned rights, notice, or payment instruction was incomplete | Assignment agreement, Claim Form, and communications with the insurer | Who acquired which portion of the claim | Prevent duplicate claims and notify the insurer in writing |
| The policy was assigned after the assured had parted with the insured interest | The parties assumed that the policy could be assigned at any time after sale of the cargo | Sale contract, risk-transfer records, and insurance policy | Whether there was an agreement to assign before or at the time of transfer of the interest | Review Section 51 of the Marine Insurance Act 1906 and the applicable law |
Practical Decision Flow for Assignment
- Confirm the governing law of the marine insurance contract and insurance policy.
- Check whether the policy or insurance terms prohibit or restrict assignment.
- Identify whether the subject of transfer is the policy rights, contractual status under the insurance, or an existing insurance claim.
- Determine whether the assignment is being made before or after loss.
- For an assignment before loss, confirm who is expected to hold the insurable interest when a future loss occurs.
- For an assignment after loss, confirm whether the assignor held the insurable interest and insurance claim at the time of loss.
- Compare the sale contract, Incoterms, B/L, Invoice, and names shown in the insurance policy.
- Confirm whether the endorsement, separate assignment document, policy delivery, or other method complies with the governing law and insurance terms.
- In an L/C transaction, review documentary compliance and substantive claim entitlement separately.
- In triangle trade, compare each sales price with the original insured amount and consider Increased Value Insurance.
- For an assignment after loss, confirm notice to the insurer, whether consent is required, the payment destination, and prevention of duplicate claims.
- Where the legal effect is uncertain, consult the insurer, insurance agent, and a lawyer experienced in marine insurance law.
Example 1: Assigning a Policy to the Buyer under CIF Terms
A Japanese seller sells cargo under CIF terms and arranges marine cargo insurance in the seller’s name. After the goods are loaded on board and risk has transferred to the buyer, a loss may occur during the ocean transit.
The fact that the seller arranged the insurance does not necessarily mean that the seller will ultimately bear the loss. Where the buyer bears the risk, the policy endorsement, assignment, and policy delivery should be arranged so that the buyer can make a claim under the insurance.
The review must cover more than whether the policy was physically sent to the buyer. The parties should confirm the insurable interest at the time of loss, the Assured named in the policy, the endorsement method, the L/C conditions, and any restriction on assignment in the insurance terms.
Example 2: Assigning Only the Original Insurance in a Triangle Trade
Assume that the original exporter sells goods to an intermediary for 100, and the intermediary resells them to the final buyer for 130. Even if the original exporter arranges insurance based on 100 and assigns that policy to the final buyer, the insured amount does not automatically increase to 130.
If the cargo becomes a total loss, there may be a difference between the value covered under the original policy and the economic loss suffered by the intermediary or final buyer.
The parties must therefore consider not only the validity of the assignment but also Increased Value Insurance covering the intermediary’s profit or the difference in the final sales price. The original insurer’s ability to accommodate the increased value should be confirmed when the original insurance is arranged.
Example 3: Assigning an Insurance Claim after Loss
After a cargo casualty, the seller and buyer may settle the loss between themselves and agree that the seller will assign its insurance claim to the buyer.
In that situation, it is necessary to confirm whether the seller held the insurable interest and a valid insurance claim when the loss occurred, which part of the claim is being transferred, and which documents the insurer requires.
An agreement between the parties stating that the claim is assigned may not be sufficient for the insurer to determine the proper payment destination, scope of the assignment, or absence of duplicate claims. The assignment agreement, payment instruction, loss documents, and written notice to the insurer should be prepared.
Common Misunderstandings
| Misunderstanding | Correct Approach | Practical Point |
|---|---|---|
| Endorsing the B/L automatically transfers the insurance rights | Transfer of rights under the B/L and transfer of rights under the insurance contract are separate matters | Confirm the insurance-policy endorsement and assignment separately |
| Possession of the insurance policy establishes entitlement to insurance proceeds | Possession alone is insufficient; insurable interest and a valid transfer of rights must also be established | Confirm who bore the economic loss at the time of casualty |
| Policy endorsement and assignment are exactly the same | An endorsement is one possible method of effecting or recording an assignment | Distinguish the form from the legal effect |
| Compliance with the L/C guarantees that the insurance claim will succeed | The bank’s document examination and the insurer’s claim examination are separate | Also review insurable interest, cause of loss, and policy terms |
| Under CIF, only the seller that arranged the insurance can make the claim | The buyer may make the claim where the loss occurred after risk transferred | Confirm the assignment and the point of risk transfer |
| Sale of the cargo automatically transfers rights under the insurance contract | Transfer of the cargo interest and assignment of the policy are examined separately | Confirm whether there was an agreement to assign before or at the time of transfer |
| An insurance claim can be assigned to anyone after loss | The assignor must first have a valid claim capable of being assigned | Confirm the governing law, transferred rights, notice, and payment destination |
| Assignment increases the insured amount | Assignment does not increase the insured amount or policy limit | Consider Increased Value Insurance in triangle trade |
| Issuing a Switch B/L automatically changes the insurance documents | Replacement of the B/L and amendment of the insurance policy are separate procedures | Recheck the Assured, Invoice, and insured amount |
| Insurer consent is always required for an assignment | The need for consent or notice depends on the governing law, policy, and insurance terms | Do not apply a universal rule; confirm the procedure with the insurer |
When a Maritime Lawyer or Insurance Specialist Should Be Consulted
| Issue | Main Party to Consult | Matters to Confirm | Why Early Confirmation Is Necessary |
|---|---|---|---|
| Application of Section 51 of the Marine Insurance Act 1906 | Lawyer experienced in marine insurance law | Whether there was an agreement to assign before or at the time of transfer of the insured interest | The attempted assignment may be ineffective |
| Assignment of a claim after loss | Insurer and lawyer | Transferred rights, notice, perfection, and payment destination | To prevent duplicate claims or payment to the wrong party |
| Triangle trade and Increased Value Insurance | Insurer and insurance agent | Original insured amount, intermediary profit, and increased value | Additional insurance may not be available after a loss |
| Conflict with a Switch B/L | NVOCC, insurer, and maritime lawyer | Original and switched B/Ls, insurance policy, Invoice, and rights of the parties | The issue may affect both cargo delivery and the insurance claim |
| Assignment prohibition or consent condition | Insurer, insurance agent, and lawyer | Policy wording, insurance terms, governing law, and consent procedure | An agreement between the parties alone may be insufficient |
| Several governing laws are involved | Qualified counsel in the relevant jurisdictions | Governing law of the insurance contract, assignment agreement, and assigned claim | Assignment requirements may differ between jurisdictions |
Decision Checklist
| Review Stage | Party to Consult | Items to Confirm | Response if a Problem Is Found |
|---|---|---|---|
| When concluding the sale contract | Seller, buyer, and legal team | Sale terms, risk transfer, obligation to arrange insurance, and intended claimant | State the flow of the policy and risk transfer in the contract |
| When applying for insurance | Insurer and insurance agent | Assured, insured amount, intended assignment, and assignment restrictions | Correct the description and terms before the policy is issued |
| When the insurance policy is issued | Insurer and insurance agent | Blank endorsement, endorsement to a named party, or separate assignment document | Review the draft policy before final issue |
| When the B/L is issued | shipping line, NVOCC, and freight forwarder | Relationship between the B/L names and the names shown in the insurance policy | Correct each document while recognising that the rights are separate |
| Before L/C presentation | Bank, exporter, and insurer | L/C conditions, endorsement, insured amount, and issue date | Correct any Discrepancy before bank examination |
| When structuring triangle trade | Original exporter, intermediary, and final buyer | Each sales price, insured amount, intermediary profit, and need for Increased Value Insurance | Design the original and increased value insurance together |
| When using a Switch B/L | NVOCC, freight forwarder, and insurer | Original and switched B/Ls, Invoice, Assured, and insured amount | Reconcile the insurance documents as well as the B/L |
| Immediately after a loss | Assured, insurer, and surveyor | Insurable interest at the time of loss, policy holder, and party bearing the loss | Identify the claimant and preserve the required documents |
| When assigning a claim after loss | Assignor, assignee, and insurer | Transferred rights, notice, need for consent, payment destination, and duplicate claims | Confirm the procedure with the insurer in writing |
| Before payment of insurance proceeds | Insurer, claimant, and other interested parties | Final payment destination, scope of the claim, and agreement among the parties | Prepare a payment instruction or assignment confirmation |
Summary
Assignment of Marine Policy means the transfer of a marine insurance policy or rights under a marine insurance contract to another party.
Under the Marine Insurance Act 1906, a marine policy may generally be assigned before or after loss unless assignment is expressly prohibited, and the assignment may be effected by endorsement on the policy or in another customary manner.
However, ownership of the cargo, contractual risk under the sale, rights under the B/L, rights under the insurance policy, and an existing insurance claim are separate legal relationships.
Possession of the policy, an endorsement on the policy, or possession of the B/L does not by itself establish entitlement to insurance proceeds. Insurable interest at the time of loss, validity of the assignment, restrictions under the insurance terms, and whether the casualty falls within the scope of cover must also be confirmed.
In transactions involving CIF or CIP terms, L/C payment, triangle trade, or a Switch B/L, the sale contract, B/L, Invoice, insurance policy, and Increased Value Insurance should be designed and reviewed together.
In triangle trade in particular, assigning the original insurance policy to the final buyer does not automatically cover the intermediary’s profit or the difference in the final sales price. Assignment and Increased Value Insurance must be considered separately.
Where an assignment is made after loss, the parties must determine whether the assignor held a valid insurance claim, which rights are being transferred, whether notice or consent is required, and who should receive the insurance proceeds.
Assignment of Marine Policy is therefore not merely the physical transfer of an insurance document. It is an important process for determining, before a loss occurs, who will bear the economic loss and who will be entitled to claim under the relevant marine insurance contract.
