L/C Insurance Document Checklist — What Banks Check
Interlink編集部This page is a translation for reading support. The Japanese article is the official version. For legal, customs, insurance, or regulatory decisions, please confirm against the Japanese original and the relevant parties.
Insurance Documents Checked by Banks
Insurance documents checked by banks are an Insurance Policy, Insurance Certificate, or another insurance document presented under a documentary credit and examined for compliance with the credit and consistency with the B/L, AWB, Invoice, and other shipping documents.
This article does not provide a general explanation of the legal nature of an insurance policy or the cargo-claim process. It focuses on extracting insurance requirements from the L/C, instructing the insurer accurately, checking the completed document, and preventing discrepancies before presentation to the bank.
Banks generally examine documents rather than the physical cargo or the cause of a casualty.
An insurance document may be valid as evidence of insurance but still be discrepant if it fails to satisfy the required document type, amount, currency, coverage, date, signature, endorsement, or transit stated in the credit.
Scope of This Article
| Item | Covered in This Article | Covered in Other Articles |
|---|---|---|
| Extraction of L/C requirements | Explains how to identify insurance-document requirements in the credit. | General interpretation of an L/C and the roles of issuing and advising banks are addressed in documentary-credit articles. |
| Type of insurance document | Explains whether an Insurance Policy, Insurance Certificate, or another document is required. | The legal nature of an insurance policy is addressed in Letter of Credit and Insurance Policy. |
| Insured amount and currency | Explains calculation and comparison using the L/C and Invoice. | General CIF and CIP price structures are addressed in the relevant Incoterms articles. |
| Insurance conditions | Explains how to reflect coverage required by the credit. | Coverage and exclusions under ICC clauses are addressed in cargo-insurance articles. |
| Issue date and attachment | Explains comparison with shipment and the need to show earlier effectiveness where applicable. | The actual attachment of cargo cover is addressed in insured-transit articles. |
| Name and endorsement | Explains the name and endorsement required for presentation. | Assignment of claim rights and the legal difference from B/L endorsement are addressed separately. |
| Cross-document comparison | Explains comparison among the L/C, insurance document, B/L, AWB, and Invoice. | General requirements for each transport document are addressed in the relevant articles. |
| Discrepancy response | Explains reissue, correction, L/C Amendment, and Applicant Waiver. | Detailed refusal procedures are addressed in the Discrepancy article. |
| Cargo insurance claims | Confirms only that a cargo claim is a separate procedure. | Cause of loss, survey, Claim Letter, and loss calculation are addressed in cargo-claim articles. |
Division of Roles between This Article and Letter of Credit and Insurance Policy
| Item | Insurance Documents Checked by Banks | Letter of Credit and Insurance Policy | How to Use the Articles |
|---|---|---|---|
| Main purpose | Pre-presentation review and discrepancy prevention | Understanding the legal and operational structure of insurance documents under an L/C | Use this article for document preparation and the related article for general principles. |
| Main readers | Exporters, trading companies, trade personnel, presentation personnel, and insurance coordinators | Trade personnel, insurance practitioners, and contract managers | Operational personnel should use the checklists in this article. |
| Main content | Requirement extraction, document comparison, correction, and Waiver handling | Nature of the insurance policy, CIF and CIP, endorsement, and claim rights | The same general explanations are not repeated in both articles. |
| Banks and insurers | Explains the distinction only to the extent required for presentation. | Explains the wider legal and operational roles. | Detailed cargo-claim review is delegated to other articles. |
Minimum Distinction between Bank Examination and Cargo-Claim Review
| Item | Bank Document Examination | Insurer Cargo-Claim Review | Treatment in This Article |
|---|---|---|---|
| Purpose | Determines whether the document complies with the credit. | Determines whether an insured cargo loss is payable. | This article is limited to presentation compliance. |
| Main documents | L/C, insurance document, B/L, AWB, and Invoice | Policy, casualty evidence, survey report, and loss statement | Detailed casualty evidence is delegated to claim articles. |
| Main decision | Compliance or discrepancy | Coverage, exclusion, amount of loss, and insurance payment | Bank acceptance must not be confused with claim payment. |
| Effect | Affects payment, negotiation, or acceptance under the L/C. | Affects whether and how much the insurer pays. | Bank acceptance is not a guarantee of claim payment. |
Standard Workflow before Bank Presentation
- Receive the L/C: Review the insurance clause, additional conditions, and required-document list.
- Create a requirement sheet: Record document type, number of originals, issuer, signature, amount, currency, coverage, date, transit, name, and endorsement.
- Clarify uncertain wording: Ask the advising or presenting bank before instructing the insurer.
- Instruct the insurer or insurance agent: Provide the full credit or the complete insurance-related wording.
- Provide planned transport data: Share the vessel, voyage, transport-document number, route, cargo description, and planned shipment date.
- Review the draft insurance document: Compare every entry with the requirement sheet.
- Compare all shipping documents: Cross-check the insurance document, B/L or AWB, Invoice, and Packing List.
- Correct inconsistencies: Consider reissue, correction, or an L/C Amendment before presentation.
- Fix the final version: Retain a copy and confirm originals and endorsements.
- Present to the bank: Submit it with the complete documentary presentation and record any comments.
Insurance Requirements to Extract from the L/C
| Requirement | What to Identify in the L/C | Insurance Instruction | Risk if Missed |
|---|---|---|---|
| Document title | Insurance Policy, Insurance Certificate, or another document | Arrange the exact required document type. | A different document may be treated as discrepant. |
| Originals and copies | Full Set, Original, Duplicate, or another requirement | Arrange the required number of originals. | The presentation may contain insufficient originals. |
| Issuer | Insurance Company, Underwriter, or Agent | Confirm the issuer and any agency capacity. | The document may not appear to be formally issued. |
| Signature | Signature or authentication requirements | Obtain the signature of the insurer or authorised agent. | An unsigned or unauthorised document may be questioned. |
| Insured amount | A stated percentage of Invoice Value or another basis | Calculate the required amount and specify the currency. | The document may show insufficient insurance. |
| Currency | Required L/C or Invoice currency | State the insured amount in the required currency. | The bank may be unable to confirm the required amount. |
| Insurance conditions | ICC, All Risks, War, Strikes, or another condition | Transmit the wording accurately to the insurer. | Required coverage may appear to be missing. |
| Date | Relationship to shipment or earlier attachment | Arrange an appropriate issue date and effective-date statement. | The bank may question whether insurance was effective at shipment. |
| Transit | From, To, Port, Airport, or Final Destination | Match the actual transit and transport documents. | The insured transit may not match the credit. |
| Name and endorsement | To Order, Blank Endorsed, or another requirement | Confirm the insured name and required endorsement. | The transferability required by the credit may be missing. |
| Additional wording | Claim Payable, Franchise, or a specified risk | Provide the required wording to the insurer. | An additional condition may not be satisfied. |
Main Insurance Documents Presented to Banks
| Document | Main Function | Pre-Presentation Review | Caution |
|---|---|---|---|
| Insurance Policy | States insurance arranged for an individual shipment or under a broader contract. | Confirm whether the L/C requires a Policy. | A Certificate may not be an acceptable substitute. |
| Insurance Certificate | Certifies insurance for an individual shipment under an Open Policy. | Confirm that the L/C permits a Certificate. | It may be discrepant where only a Policy is required. |
| Declaration or Advice | Records a declaration or insurance instruction under an Open Policy. | Confirm whether it is acceptable as the presented insurance document. | An internal declaration may not satisfy the credit. |
| Cover Note or Similar Document | May show temporary or preliminary insurance arrangements. | Confirm whether the credit permits that form. | It may not replace a formal Policy or Certificate. |
Priority Review before Presentation
| Item | Review Method | Typical Inconsistency | Correction | Final Reviewer |
|---|---|---|---|---|
| Document type | Compare with Documents Required. | A Certificate is prepared where a Policy is required. | Request reissue in the required form. | Trade and presentation personnel |
| Issuer and signature | Confirm the issuer and agency wording. | No signature or unclear authority | Obtain a formally signed document. | Insurance personnel |
| Insured amount | Recalculate from the final Invoice and required percentage. | The amount is below the required minimum. | Increase the insurance and obtain a revised document. | Trade and accounting personnel |
| Currency | Compare the L/C, Invoice, and insurance document. | Invoice in USD and insurance in JPY | Reissue in the required currency or obtain bank guidance. | Trade personnel |
| Insurance conditions | Compare the wording with the credit. | War or Strikes wording is missing. | Add the actual insured condition and reissue. | Insurance personnel |
| Issue and effective dates | Compare with the On Board Date or AWB date. | The issue date is later and no earlier effectiveness is shown. | Obtain a correctly stated document. | Insurance and trade personnel |
| Insured name | Review the L/C, commercial flow, and insurance arrangement. | The name differs from the required name. | Correct the name or complete the required endorsement. | Insurance personnel |
| Endorsement | Review the original document. | Blank endorsement is required but missing. | Have an authorised person endorse the document. | Exporter and trade personnel |
| Transit | Compare the place of receipt, port or airport, and final destination. | The inland destination or transshipment is missing. | Correct the transit to match the transaction. | Freight forwarder and insurance personnel |
| Cargo description | Compare the Invoice, transport document, and Packing List. | The description appears to cover different goods. | Use wording that identifies the same cargo. | Exporter and freight forwarder |
| Transport-document number | Confirm which B/L or AWB is required. | The House and Master B/L numbers are confused. | Correct the number to match the presented document. | Freight forwarder and trade personnel |
Cross-Document Comparison
| Item | L/C | Insurance Document | B/L or AWB | Invoice and Other Documents |
|---|---|---|---|---|
| Cargo description | Description or permitted wording | Insured Goods | Description of Goods | Product, model, and specification |
| Quantity and packing | Quantity and tolerance | Package, Quantity, and Weight | Packages and Gross Weight | Quantity, Net Weight, and Gross Weight |
| Amount | L/C amount and required insurance percentage | Sum Insured | Normally not a central transport-document item | Invoice Amount and CIF or CIP Value |
| Currency | L/C Currency | Sum Insured Currency | Usually limited relevance | Invoice Currency |
| Transit | Shipment and destination requirements | From, To, and Transit | Port, Airport, and Place of Delivery | Delivery Term and Destination |
| Shipment date | Latest Shipment Date | Issue Date and Effective Date | On Board Date or AWB Date | Invoice Date |
| Parties | Applicant and Beneficiary | Insured and Assignee | Shipper, Consignee, and Notify Party | Seller and Buyer |
| Transport-document number | May be specifically required. | B/L No. or AWB No. | House, Master, or AWB number | May also appear. |
The names shown in the different documents do not always have to be identical. Applicant, Beneficiary, Seller, Buyer, Shipper, Consignee, and Insured describe different functions.
The requirement is that the names and roles remain explainable and consistent with the credit and the actual commercial structure.
House B/L and Master B/L
Where an NVOCC issues a House B/L and a shipping line issues a Master B/L, the transport-document number and carrier information shown in the insurance document must be identified carefully.
| Review Item | What to Confirm | Typical Problem | Response |
|---|---|---|---|
| B/L required by the L/C | Whether a House or Master B/L will be presented | The insurance document refers to a B/L that will not be presented. | Align it with the presented transport document. |
| B/L number | Whether the number is House or Master | The two numbers are confused. | Confirm the number type with the freight forwarder. |
| Vessel and voyage | Actual Carrier information shown in the Master B/L | The provisional vessel remains in the insurance document. | Update it to the final shipment information. |
| Transit | Door-to-Door House B/L transit and port-to-port Master B/L transit | The insurance document shows only the ocean segment. | Review the required and actual insured transit. |
| Parties | Different Shipper and Consignee entries in the House and Master B/L | The relationship to the insured cannot be explained. | Prepare a transaction map and identify the presented document. |
AWB Transactions
For air transport, compare the AWB number, departure airport, destination airport, final destination, cargo description, and weight with the insurance document.
An AWB is not a document of title equivalent to a negotiable B/L. It is nevertheless a transport document examined under the credit, and an inconsistency with the insurance document may create a documentary problem.
| Item | AWB | Insurance Document | Response |
|---|---|---|---|
| AWB number | Air Waybill No. | Number and accuracy | Confirm exact correspondence where required. |
| Transit | Departure, Destination, and Final Destination | From, To, and any inland transit | Do not confuse airport-to-airport with Warehouse to Warehouse. |
| Cargo description | Nature and Quantity of Goods | Insured Goods | Use wording that identifies the same cargo. |
| Weight | Gross Weight | Insured Quantity or Weight | Review units and rounding differences. |
| Parties | Shipper and Consignee | Insured or assignee | Review the different functions of each name. |
Common Discrepancies and Corrections
| Discrepancy | Cause | Correction before Presentation | Response after Presentation | Caution |
|---|---|---|---|---|
| Insured amount is insufficient. | Calculation error or revised Invoice | Increase the insurance and obtain a revised document. | Ask whether a replacement presentation is possible. | Confirm any additional premium and actual coverage. |
| Required insurance condition is missing. | L/C wording was not transmitted. | Obtain a document showing the actual additional condition. | Consider Applicant Waiver or replacement. | Do not add wording for cover that was never arranged. |
| Issue date is later than shipment. | Late instruction or late certificate issue | Obtain a document correctly showing earlier effectiveness where applicable. | Confirm acceptability with the bank. | Do not create a false backdated document. |
| Required endorsement is missing. | Failure to inspect the original | Complete the authorised endorsement. | Follow the bank’s instruction for completion. | Avoid endorsement by an unauthorised person. |
| Currency differs. | The policy’s base currency was used. | Request a document in the required currency. | Ask whether the Applicant or bank will accept it. | A conversion basis may be required. |
| Transit differs. | Incomplete Booking or final-destination information | Correct the transit to match the L/C and shipment. | Consider reissue or Waiver. | Do not reduce the actual insurance cover improperly. |
| Wrong document type | A Certificate was assumed to be sufficient under an Open Policy. | Obtain the document required by the credit. | Consider replacement or L/C Amendment. | Review the presentation deadline. |
| House and Master B/L numbers differ. | Incomplete coordination with the freight forwarder | Correct the number to match the presented B/L. | Ask whether the same-shipment relationship can be accepted. | Confirm that the correction does not change the insured shipment. |
Reissue, L/C Amendment, and Waiver
| Method | Appropriate Situation | Main Parties | Advantage | Caution |
|---|---|---|---|---|
| Reissue of insurance document | The document can be corrected consistently with the insurance facts. | Exporter, insurer, and insurance agent | Directly aligns the document with the credit. | The insurer cannot certify facts that are untrue. |
| L/C Amendment | The credit requirement does not match the transaction or insurance practice. | Applicant, Beneficiary, issuing bank, and advising bank | Corrects the requirement for future presentation. | Requires agreement and bank processing time. |
| Applicant Waiver | The Applicant accepts a discrepancy after presentation. | Applicant, issuing bank, and presenting bank | May resolve a document that cannot be reissued. | Applicant acceptance alone may not constitute final bank payment. |
| Collection handling | The presentation cannot be treated as complying under the credit. | Exporter, bank, and importer | Allows the documents to be presented to the buyer. | The exporter may lose reliance on the L/C undertaking. |
Freight Forwarder Involvement
A freight forwarder may not issue the insurance document but may materially affect its accuracy through transport and shipping-document information.
| Stage | Information the Freight Forwarder Can Provide | Matters the Freight Forwarder Cannot Decide Alone | Main Party to Consult | Response to a Problem |
|---|---|---|---|---|
| Booking | Planned vessel, flight, loading place, discharge place, and route | Required insurance conditions and insured amount under the L/C | Exporter, bank, and insurance personnel | Identify provisional information clearly. |
| Draft B/L | House or Master status, vessel, voyage, and cargo description | Insured name and endorsement requirements | Exporter and insurer | Share final information promptly. |
| AWB preparation | AWB number, airports, cargo description, and weight | Required insurance-document type and originals | Exporter and bank | Assist in comparing the AWB and insurance document. |
| Transshipment | Transit point, carrier change, and Actual Carrier information | Whether the change is covered by the insurance | Insurer or insurance agent | Report the change before a casualty. |
| Before bank presentation | Final transport-document information | Whether the bank will treat an item as discrepant | Presenting bank | Correct factual errors in the transport document. |
Cases Frequently Causing Practical Problems
| Case | Main Cause | Documents to Review | Decision Point | Initial Response |
|---|---|---|---|---|
| The L/C requires an Insurance Policy, but a Certificate was prepared. | The insurer did not receive the L/C wording. | L/C, Certificate, and insurance contract | Determine whether the required document type is satisfied. | Request a Policy before presentation. |
| The Invoice increased but the insured amount did not. | No coordination between Invoice and insurance personnel | Final Invoice, insurance document, and L/C | Recalculate the required insurance percentage. | Obtain an increased insurance document. |
| The insurance document was issued after shipment. | The request was made only after shipment was confirmed. | B/L, insurance document, and Open Policy | Determine whether earlier effectiveness is shown. | Ask the insurer for appropriate effective-date wording. |
| The Master B/L number was shown instead of the House B/L number. | Failure to confirm the document to be presented | L/C, House B/L, Master B/L, and insurance document | Determine whether the insurance document corresponds to the presented B/L. | Correct the number where necessary. |
| War cover was omitted. | An additional L/C condition was overlooked. | L/C, insurance conditions, and insurance document | Confirm whether War Risks were actually insured. | Add the wording if insured or arrange additional cover. |
| The insurance document and AWB showed different destinations. | Failure to communicate the inland destination | AWB, Booking, insurance document, and L/C | Compare the required and actual insured transit. | Correct the transit. |
| The original was not endorsed. | Only a PDF copy was reviewed. | Original insurance document and L/C | Confirm the required endorsement and authorised signatory. | Complete the endorsement before presentation. |
| The exporter altered the insurance document after a bank comment. | The formal reissue process was bypassed. | Original, altered document, and insurer response | Confirm authority to correct the document. | Obtain a formal reissue or correction certificate. |
Example 1: Insufficient Insured Amount
Facts: Exporter A shipped machinery under an L/C requiring insurance for a stated percentage of the Invoice amount. Additional charges were added to the final Invoice but were not communicated to the insurance personnel, leaving the Sum Insured below the required amount.
Review: A compared the L/C amount, final Invoice, required percentage, currency, and Sum Insured.
Analysis: The insurance contract existed, but the presented amount did not satisfy the documentary-credit requirement.
Response: Before presentation, A requested an increase and obtained a revised Insurance Policy.
Conclusion: The insured amount should be rechecked against the final Invoice rather than the preliminary commercial value.
Example 2: Insurance Certificate Issued after Shipment
Facts: Exporter B used an Open Policy but requested the Insurance Certificate late. The issue date shown on the document was later than the On Board Date.
Review: B examined the Open Policy attachment, Certificate issue date, effective-date wording, and L/C conditions.
Analysis: A later issue date does not necessarily mean that insurance did not exist. The bank must nevertheless be able to determine from the document that insurance was effective no later than shipment.
Response: B did not request a false backdate. It obtained a document that correctly stated the actual earlier attachment of cover.
Conclusion: The issue date and effective date are separate, but the relevant effectiveness must be shown in an acceptable manner.
Example 3: House B/L and Master B/L Number Difference
Facts: NVOCC C issued a House B/L and obtained a Master B/L from Shipping Line D. Exporter E was to present the House B/L, but the Insurance Certificate stated the Master B/L number.
Review: E checked the transport document required by the credit, the document actually presented, the insurance-document number, and the transit.
Analysis: Although both B/Ls related to the same movement, the connection between the insurance document and the presented transport document was unclear.
Response: E explained the presentation structure to the freight forwarder and insurer and obtained a corrected document showing the House B/L number.
Conclusion: A B/L number in an insurance document should correspond to the transport document presented under the credit.
Decision Process after Discovery of a Discrepancy
- Review the exact wording: Compare the relevant L/C clause with the insurance document rather than relying only on a summary.
- Classify the problem: Separate a clerical error, actual lack of insurance, and an impractical L/C requirement.
- Identify the stage: Determine whether the discrepancy was found before or after presentation.
- Ask whether the insurer can correct it: Confirm whether the document can be revised consistently with the insurance facts.
- Consider an L/C Amendment: Amend the credit where the requirement itself does not match the transaction.
- Consider Applicant Waiver: Where replacement or amendment is not possible in time, consider acceptance of the discrepancy.
- Protect the insurance position: Ensure that a documentary correction does not improperly change the insured transit or coverage.
- Retain the final record: Keep the reissued document, bank response, Waiver, and Amendment.
The objective is not merely to remove the bank’s comment. The L/C, actual insurance arrangement, and transport facts should be aligned through a formally authorised correction.
When to Consult the Bank, Insurer, or a Specialist
| Situation | Main Party to Consult | Issue | Reason for Urgency |
|---|---|---|---|
| Ambiguous insurance requirement | Advising or presenting bank | Document type, percentage, originals, and endorsement | Correction after issue may delay presentation. |
| The insurer cannot issue the required condition. | Insurer, insurance agent, and bank | Alternative wording, L/C Amendment, and insurability | Shipment and presentation deadlines may be affected. |
| A backdated correction is requested. | Insurer, bank, and legal personnel | Actual attachment, correction authority, and document authenticity | A false document must not be created. |
| Authenticity or signing authority is disputed. | Insurer, bank, and, where necessary, lawyer | Issue authority, agency authority, and original status | Fraud or unauthorised issue may be involved. |
| Banks in different countries take different positions. | Presenting bank and documentary-credit specialist | L/C wording, applicable rules, and banking practice | A decision is required before the presentation period expires. |
| A discrepancy and cargo casualty occur together. | Bank, insurer, insurance agent, and, where necessary, maritime lawyer | Document presentation, claim rights, casualty notice, and preservation of rights | Bank and cargo-claim procedures must proceed in parallel. |
Common Misunderstandings
| Misunderstanding | Actual Position | Practical Caution |
|---|---|---|
| A valid insurance contract must be accepted by the bank. | The document may still be discrepant if it does not satisfy the L/C. | Separate insurance validity from documentary compliance. |
| Bank acceptance guarantees payment of a cargo claim. | Bank examination and insurer claim review are separate. | The insurer still reviews the casualty, coverage, and amount of loss. |
| An Insurance Certificate is always sufficient under an Open Policy. | The L/C may specifically require an Insurance Policy. | Review Documents Required. |
| A later issue date is harmless if insurance existed. | The document must show acceptable evidence of cover effective no later than shipment. | Review both the issue date and effective-date wording. |
| House and Master B/L numbers are interchangeable. | They identify different transport documents. | Use the B/L presented under the credit. |
| B/L endorsement and insurance endorsement transfer the same right. | They concern different rights and documents. | Review each endorsement separately. |
| The freight forwarder will confirm every insurance-document requirement. | The forwarder provides transport data but does not necessarily make the final L/C or insurance decision. | The exporter, bank, and insurance personnel must complete the final review. |
| An original can be manually altered after a bank comment. | Correction authority and formal reissue are required. | Do not alter an insurance document without insurer approval. |
| Applicant acceptance always requires the issuing bank to pay. | The bank’s formal treatment of the Waiver must be confirmed. | Obtain the bank’s final response. |
| Discrepancy correction only concerns bank acceptance. | The corrected document must also remain consistent with the actual insurance contract. | Confirm the correction with both the bank and insurer. |
Decision Checklist
| Review Stage | Party to Consult | Items to Confirm | Action if a Problem Exists |
|---|---|---|---|
| Receipt of L/C | Exporter, trading company, and bank | Document type, originals, amount, currency, coverage, and endorsement | Ask the bank to clarify uncertain wording. |
| Insurance arrangement | Insurer or insurance agent | Full L/C wording, planned shipment, transit, and cargo | Provide a written requirement sheet. |
| Final Invoice | Exporter, trading company, and accounting personnel | Final amount, currency, and insurance percentage | Recalculate and increase the insurance if necessary. |
| Draft B/L or AWB | Freight forwarder, NVOCC, and exporter | Number, vessel, flight, route, description, and weight | Correct the information supplied for the insurance document. |
| Receipt of draft insurance document | Exporter and insurance personnel | Whether every L/C requirement is included | Request reissue before bank presentation. |
| Before presentation | Exporter, trading company, and presentation personnel | Cross-document consistency among the insurance document, B/L or AWB, and Invoice | Prepare an inconsistency list and correct every item. |
| Bank discrepancy | Bank, insurer, insurance agent, and Applicant | Reissue, Amendment, Waiver, and presentation deadline | Select the most reliable response within the deadline. |
| Correction | Insurer, bank, and legal personnel | Correction authority, factual accuracy, and effect on insurance | Avoid unauthorised alteration and obtain a formal document. |
| After bank acceptance | Exporter and bank | Final presentation, comments, and result | Retain the submitted version and bank response. |
| Cargo casualty | Insured, insurer, insurance agent, and freight forwarder | Claim rights, notice, evidence, and Claim Letter | Begin the cargo-claim process separately from bank examination. |
Summary
This article is limited to pre-presentation review and discrepancy handling. General principles concerning insurance policies under documentary credits are delegated to Letter of Credit and Insurance Policy.
The first task is to extract the required insurance-document type, originals, issuer, signature, insured amount, currency, insurance conditions, date, transit, name, and endorsement from the L/C.
After receiving the insurance document, compare it not only with the credit but also with the B/L or AWB, Invoice, and Packing List. The insured amount, coverage, date, currency, endorsement, transit, and document type require particular attention.
Where both a House B/L and Master B/L exist, the number in the insurance document should correspond to the transport document presented under the credit. In an air shipment, review the AWB number, airports, final destination, cargo description, and weight.
Where an inconsistency is identified, consider reissue, L/C Amendment, Applicant Waiver, or collection handling. A document must not be given a false date, condition, or transit merely to obtain bank acceptance.
Acceptance of the insurance document by the bank does not guarantee payment of a later cargo claim. Documentary-credit review and cargo-claim adjustment must be managed as separate procedures.
