An Insurance Policy is a written document by which the insurer (insurance company), upon the application of the applicant (usually the exporter or importer), assumes liability for compensation for loss of or damage to the insured goods that may occur during transportation. Its core functions are: to serve as proof of the formation of the insurance contract and clarify the rights and obligations of both parties; to serve as the basis for claims after loss or damage to the goods; and in letter of credit settlement, to serve as one of the documents that the beneficiary must submit, safeguarding the rights and interests of the bank and the buyer. The insurance policy has legal effect and is an indispensable risk management tool in international trade.
An Insurance Policy is a written document by which the insurer (insurance company), upon the application of the applicant (usually the exporter or importer), assumes liability for compensation for loss of or damage to the insured goods that may occur during transportation. Its core functions are: to serve as proof of the formation of the insurance contract and clarify the rights and obligations of both parties; to serve as the basis for claims after loss or damage to the goods; and in letter of credit settlement, to serve as one of the documents that the beneficiary must submit, safeguarding the rights and interests of the bank and the buyer. The insurance policy has legal effect and is an indispensable risk management tool in international trade.
🎯 Purpose
The purposes of an insurance policy are: 1) to transfer the risks of cargo transportation and protect the interests of both buyer and seller; 2) to meet the requirements of the letter of credit or contract and ensure smooth settlement of foreign exchange; 3) to serve as evidence for claiming compensation from the insurance company when loss or damage occurs to the goods; 4) under trade terms such as CIF and CIP, the seller must arrange insurance and submit an insurance policy. The stages requiring an insurance policy include: export insurance application by the exporter, document examination by the bank, cargo collection by the importer, customs inspection (required by some countries), and claims settlement after cargo damage. The insurance policy is one of the core documents in foreign trade documentation.
The purposes of an insurance policy are: 1) to transfer the risks of cargo transportation and protect the interests of both buyer and seller; 2) to meet the requirements of the letter of credit or contract and ensure smooth settlement of foreign exchange; 3) to serve as evidence for claiming compensation from the insurance company when loss or damage occurs to the goods; 4) under trade terms such as CIF and CIP, the seller must arrange insurance and submit an insurance policy. The stages requiring an insurance policy include: export insurance application by the exporter, document examination by the bank, cargo collection by the importer, customs inspection (required by some countries), and claims settlement after cargo damage. The insurance policy is one of the core documents in foreign trade documentation.
📋 Key Fields
Insured: Fill in the name of the applicant, usually the beneficiary of the letter of credit (the exporter). If the letter of credit stipulates that the buyer is the insured, fill it in accordingly. If transfer is required, it should be made in transferable form.. 常见错误: It is often mistakenly filled in as the freight forwarder or a third party, resulting in inconsistency with the letter of credit; or omitting 'or order' resulting in inability to transfer. Amount Insured: Calculated according to the markup percentage stipulated in the letter of credit or contract, usually 110% of the invoice value. It must be expressed in both words and figures, and the currency must be consistent with the letter of credit.. 常见错误: Insufficient or excessive markup percentage; inconsistency between words and figures; currency inconsistent with the invoice. Coverage: Fill in according to the requirements of the letter of credit, such as Free from Particular Average, With Particular Average, All Risks, etc., and indicate the applicable clauses (such as the People's Insurance Company of China clauses or the London Institute clauses).. 常见错误: The insured coverage does not match the requirements of the letter of credit; omission of the clause version; unauthorized addition or reduction of coverage. Description of Goods: Fill in the name of the goods, quantity, packaging, and marks, which should be consistent with the invoice, bill of lading, and other documents. Abbreviations may be used, but they must not conflict with the letter of credit.. 常见错误: The goods name is completely inconsistent with the letter of credit; omission of marks or quantity; use of general terms causing ambiguity. Means of Conveyance: Fill in the vessel name, voyage number, or flight number, etc. If transshipment is involved, indicate 'transshipment' and the means of transshipment. It should be consistent with the bill of lading.. 常见错误: Incorrect vessel name or voyage number; omission of transshipment information; inconsistency with the bill of lading causing discrepancies. Date of Commencement: Fill in the date of shipment of the goods, usually consistent with the date of the bill of lading. If uncertain, 'as per bill of lading' may be filled in.. 常见错误: The date is later than the bill of lading date; vague filling causing disputes. From...To...: Fill in the place of departure and destination of transportation, including the transshipment place. It should be consistent with the bill of lading and comply with the requirements of the letter of credit.. 常见错误: The place of departure or destination is inconsistent with the bill of lading; omission of the transshipment port; conflict with the letter of credit. Claim Payable at: Usually the destination or the place specified in the letter of credit. If stipulated in the letter of credit, the currency of payment must be specified.. 常见错误: Incorrect place of claim payment; currency inconsistent with the letter of credit; omission resulting in inability to pay. Date of Issue: The date of issuance of the insurance policy must not be later than the date of the bill of lading; otherwise, the bank may refuse payment.. 常见错误: The date of issuance is later than the bill of lading date; incorrect date format. Signature of Insurer: Signed and sealed by the insurance company or its authorized agent to ensure the original is valid.. 常见错误: Omission of signature or seal; the signatory has no authority; a copy is used as an original. Policy Number: The unique barcode number issued by the insurance company for inquiry and claims settlement.. 常见错误: Incorrect or duplicate number; omission resulting in inability to inquire. Endorsement: If transfer is required, it shall be endorsed by the insured, usually by blank endorsement or special endorsement.. 常见错误: Omission of endorsement; incorrect endorsement resulting in inability to transfer; endorsement inconsistent with the requirements of the letter of credit. Special Conditions: Such as deductible, extended liability, etc., filled in according to the requirements of the letter of credit or contract.. 常见错误: Omission of special clauses; conflict with the requirements of the letter of credit. Number of Originals: Fill in the number of originals, usually in a set of several copies, as stipulated in the letter of credit.. 常见错误: Insufficient number of copies; submission of copies resulting in refusal of payment.
Insured
Fill in the name of the applicant, usually the beneficiary of the letter of credit (the exporter). If the letter of credit stipulates that the buyer is the insured, fill it in accordingly. If transfer is required, it should be made in transferable form.
⚠️ It is often mistakenly filled in as the freight forwarder or a third party, resulting in inconsistency with the letter of credit; or omitting 'or order' resulting in inability to transfer.
Amount Insured
Calculated according to the markup percentage stipulated in the letter of credit or contract, usually 110% of the invoice value. It must be expressed in both words and figures, and the currency must be consistent with the letter of credit.
⚠️ Insufficient or excessive markup percentage; inconsistency between words and figures; currency inconsistent with the invoice.
Coverage
Fill in according to the requirements of the letter of credit, such as Free from Particular Average, With Particular Average, All Risks, etc., and indicate the applicable clauses (such as the People's Insurance Company of China clauses or the London Institute clauses).
⚠️ The insured coverage does not match the requirements of the letter of credit; omission of the clause version; unauthorized addition or reduction of coverage.
Description of Goods
Fill in the name of the goods, quantity, packaging, and marks, which should be consistent with the invoice, bill of lading, and other documents. Abbreviations may be used, but they must not conflict with the letter of credit.
⚠️ The goods name is completely inconsistent with the letter of credit; omission of marks or quantity; use of general terms causing ambiguity.
Means of Conveyance
Fill in the vessel name, voyage number, or flight number, etc. If transshipment is involved, indicate 'transshipment' and the means of transshipment. It should be consistent with the bill of lading.
⚠️ Incorrect vessel name or voyage number; omission of transshipment information; inconsistency with the bill of lading causing discrepancies.
Date of Commencement
Fill in the date of shipment of the goods, usually consistent with the date of the bill of lading. If uncertain, 'as per bill of lading' may be filled in.
⚠️ The date is later than the bill of lading date; vague filling causing disputes.
From...To...
Fill in the place of departure and destination of transportation, including the transshipment place. It should be consistent with the bill of lading and comply with the requirements of the letter of credit.
⚠️ The place of departure or destination is inconsistent with the bill of lading; omission of the transshipment port; conflict with the letter of credit.
Claim Payable at
Usually the destination or the place specified in the letter of credit. If stipulated in the letter of credit, the currency of payment must be specified.
⚠️ Incorrect place of claim payment; currency inconsistent with the letter of credit; omission resulting in inability to pay.
Date of Issue
The date of issuance of the insurance policy must not be later than the date of the bill of lading; otherwise, the bank may refuse payment.
⚠️ The date of issuance is later than the bill of lading date; incorrect date format.
Signature of Insurer
Signed and sealed by the insurance company or its authorized agent to ensure the original is valid.
⚠️ Omission of signature or seal; the signatory has no authority; a copy is used as an original.
Policy Number
The unique barcode number issued by the insurance company for inquiry and claims settlement.
⚠️ Incorrect or duplicate number; omission resulting in inability to inquire.
Endorsement
If transfer is required, it shall be endorsed by the insured, usually by blank endorsement or special endorsement.
⚠️ Omission of endorsement; incorrect endorsement resulting in inability to transfer; endorsement inconsistent with the requirements of the letter of credit.
Special Conditions
Such as deductible, extended liability, etc., filled in according to the requirements of the letter of credit or contract.
⚠️ Omission of special clauses; conflict with the requirements of the letter of credit.
Number of Originals
Fill in the number of originals, usually in a set of several copies, as stipulated in the letter of credit.
⚠️ Insufficient number of copies; submission of copies resulting in refusal of payment.
⚠️ Common Mistakes
The date of issuance of the insurance policy is later than the date of the bill of lading, resulting in the bank's refusal of payment, because insurance must take effect before shipment. The insured amount is insufficient or the markup percentage does not meet the requirements of the letter of credit, such as not reaching 110% or not being marked up as stipulated in the letter of credit. The insured coverage does not match the requirements of the letter of credit, such as the letter of credit requiring All Risks but insuring Free from Particular Average, or omitting additional risks. The name of the insured is inconsistent with the beneficiary of the letter of credit, or it is not made in transferable form as required by the letter of credit. The means of conveyance, place of departure, and destination are inconsistent with the bill of lading, resulting in document discrepancies and affecting settlement of foreign exchange. The place of claim payment is not filled in according to the letter of credit, or the currency is incorrect, resulting in inability to claim smoothly. Omission of marks or inconsistency of the goods description with the invoice, causing inconsistency between documents. Failure to submit the original or insufficient number of copies, submitting a copy when the letter of credit requires the original, resulting in refusal of payment.
⚠️ The date of issuance of the insurance policy is later than the date of the bill of lading, resulting in the bank's refusal of payment, because insurance must take effect before shipment.
⚠️ The insured amount is insufficient or the markup percentage does not meet the requirements of the letter of credit, such as not reaching 110% or not being marked up as stipulated in the letter of credit.
⚠️ The insured coverage does not match the requirements of the letter of credit, such as the letter of credit requiring All Risks but insuring Free from Particular Average, or omitting additional risks.
⚠️ The name of the insured is inconsistent with the beneficiary of the letter of credit, or it is not made in transferable form as required by the letter of credit.
⚠️ The means of conveyance, place of departure, and destination are inconsistent with the bill of lading, resulting in document discrepancies and affecting settlement of foreign exchange.
⚠️ The place of claim payment is not filled in according to the letter of credit, or the currency is incorrect, resulting in inability to claim smoothly.
⚠️ Omission of marks or inconsistency of the goods description with the invoice, causing inconsistency between documents.
⚠️ Failure to submit the original or insufficient number of copies, submitting a copy when the letter of credit requires the original, resulting in refusal of payment.
🌍 Country Requirements
United States: U.S. Customs does not mandate an insurance policy, but under letter of credit settlement it must comply with UCP600. If the importer requires it, the insurance policy must be in English, and the place of claim payment may be the United States. Note that the United States has special insurance requirements for certain commodities, such as food and pharmaceuticals. The latest announcements of the local customs shall prevail. European Union: EU countries have no uniform mandatory requirement for insurance policies, but under letters of credit they must strictly comply. The insurance policy must be in English or the local language, and the place of claim payment is usually the EU destination. Note that the EU has special insurance requirements for animal and plant products. The latest announcements of the local customs shall prevail. Japan: Japanese importers usually require an insurance policy and prefer Japanese insurance companies or internationally renowned companies. The insurance policy must be in English, and the place of claim payment may be Japan. Note that Japan has strict insurance requirements for food and cosmetics. The latest announcements of the local customs shall prevail. South Korea: South Korean importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in South Korea. The insurance policy must be in English or Korean. Note that South Korea has special regulations for certain commodities. The latest announcements of the local customs shall prevail. Middle East (Saudi Arabia/UAE): Middle Eastern countries often require the insurance policy to be issued by a local insurance company or recognized by it, and the place of claim payment must be in the importing country. The insurance policy must be in English or Arabic. Note that Saudi Arabia requires the insurance policy to comply with Islamic law. The latest announcements of the local customs shall prevail. Brazil: Brazilian importers require an insurance policy and usually require All Risks coverage, with the place of claim payment in Brazil. The insurance policy must be in Portuguese or English. Note that Brazil has special insurance requirements for certain commodities. The latest announcements of the local customs shall prevail. India: Indian importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in India. The insurance policy must be in English. Note that India has special regulations for certain commodities, such as pharmaceuticals. The latest announcements of the local customs shall prevail. Russia: Russian importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in Russia. The insurance policy must be in Russian or English. Note that Russia has special insurance requirements for certain commodities. The latest announcements of the local customs shall prevail.
United States
U.S. Customs does not mandate an insurance policy, but under letter of credit settlement it must comply with UCP600. If the importer requires it, the insurance policy must be in English, and the place of claim payment may be the United States. Note that the United States has special insurance requirements for certain commodities, such as food and pharmaceuticals. The latest announcements of the local customs shall prevail.
European Union
EU countries have no uniform mandatory requirement for insurance policies, but under letters of credit they must strictly comply. The insurance policy must be in English or the local language, and the place of claim payment is usually the EU destination. Note that the EU has special insurance requirements for animal and plant products. The latest announcements of the local customs shall prevail.
Japan
Japanese importers usually require an insurance policy and prefer Japanese insurance companies or internationally renowned companies. The insurance policy must be in English, and the place of claim payment may be Japan. Note that Japan has strict insurance requirements for food and cosmetics. The latest announcements of the local customs shall prevail.
South Korea
South Korean importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in South Korea. The insurance policy must be in English or Korean. Note that South Korea has special regulations for certain commodities. The latest announcements of the local customs shall prevail.
Middle East (Saudi Arabia/UAE)
Middle Eastern countries often require the insurance policy to be issued by a local insurance company or recognized by it, and the place of claim payment must be in the importing country. The insurance policy must be in English or Arabic. Note that Saudi Arabia requires the insurance policy to comply with Islamic law. The latest announcements of the local customs shall prevail.
Brazil
Brazilian importers require an insurance policy and usually require All Risks coverage, with the place of claim payment in Brazil. The insurance policy must be in Portuguese or English. Note that Brazil has special insurance requirements for certain commodities. The latest announcements of the local customs shall prevail.
India
Indian importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in India. The insurance policy must be in English. Note that India has special regulations for certain commodities, such as pharmaceuticals. The latest announcements of the local customs shall prevail.
Russia
Russian importers require an insurance policy, usually requiring All Risks coverage, with the place of claim payment in Russia. The insurance policy must be in Russian or English. Note that Russia has special insurance requirements for certain commodities. The latest announcements of the local customs shall prevail.
❓ FAQ
What is the difference between an insurance policy and an insurance certificate?: An insurance policy is a formal insurance contract with detailed contents and legal effect; an insurance certificate is a simplified version that lists only key clauses, has the same effect but is less formal than an insurance policy. Letters of credit usually require an insurance policy; if an insurance certificate is required, it must be handled accordingly. The letter of credit requires All Risks coverage, but the insurance company only provides Free from Particular Average. What should I do?: You must contact the insurance company to add All Risks coverage, or request an amendment to the letter of credit. If amendment is not possible, you may insure Free from Particular Average and add additional risks, but you must ensure coverage of the letter of credit requirements. Otherwise, the bank may refuse payment. Can the date of the insurance policy be later than the date of the bill of lading?: No. The date of the insurance policy must be earlier than or equal to the date of the bill of lading to prove that insurance took effect before shipment. If it is later than the bill of lading date, the bank will regard it as a discrepancy and may refuse payment. Does the insurance policy need to be endorsed?: If the letter of credit requires a transferable insurance policy, or the insured is not the buyer, endorsement is required. It is usually made as a blank endorsement, that is, the insured signs on the back without specifying the transferee. How is the insured amount calculated?: It is usually calculated at 110% of the invoice value, and the letter of credit will stipulate the specific percentage. If not stipulated, according to UCP600, the minimum is 110% of the invoice value. The insured amount must be expressed in both words and figures, and the currency must be consistent with the letter of credit. How should the place of claim payment on the insurance policy be filled in?: Fill it in according to the letter of credit, usually the destination or the importing country. If the letter of credit does not stipulate it, the destination may be filled in. The currency of claim payment should be consistent with the letter of credit to ensure smooth payment. Does the original insurance policy need to be submitted?: Yes, the letter of credit usually requires submission of the original insurance policy. If the full set of originals is required, all must be submitted. Copies are invalid. If the original is lost, you need to apply to the insurance company for reissue. What should I do if the goods description on the insurance policy is inconsistent with the invoice?: It must be consistent with the invoice, bill of lading, and other documents; otherwise, the bank may refuse payment. If it has already been issued, you need to contact the insurance company to amend it. After amendment, it must be resubmitted to ensure consistency between documents.
Q: What is the difference between an insurance policy and an insurance certificate?
A: An insurance policy is a formal insurance contract with detailed contents and legal effect; an insurance certificate is a simplified version that lists only key clauses, has the same effect but is less formal than an insurance policy. Letters of credit usually require an insurance policy; if an insurance certificate is required, it must be handled accordingly.
Q: The letter of credit requires All Risks coverage, but the insurance company only provides Free from Particular Average. What should I do?
A: You must contact the insurance company to add All Risks coverage, or request an amendment to the letter of credit. If amendment is not possible, you may insure Free from Particular Average and add additional risks, but you must ensure coverage of the letter of credit requirements. Otherwise, the bank may refuse payment.
Q: Can the date of the insurance policy be later than the date of the bill of lading?
A: No. The date of the insurance policy must be earlier than or equal to the date of the bill of lading to prove that insurance took effect before shipment. If it is later than the bill of lading date, the bank will regard it as a discrepancy and may refuse payment.
Q: Does the insurance policy need to be endorsed?
A: If the letter of credit requires a transferable insurance policy, or the insured is not the buyer, endorsement is required. It is usually made as a blank endorsement, that is, the insured signs on the back without specifying the transferee.
Q: How is the insured amount calculated?
A: It is usually calculated at 110% of the invoice value, and the letter of credit will stipulate the specific percentage. If not stipulated, according to UCP600, the minimum is 110% of the invoice value. The insured amount must be expressed in both words and figures, and the currency must be consistent with the letter of credit.
Q: How should the place of claim payment on the insurance policy be filled in?
A: Fill it in according to the letter of credit, usually the destination or the importing country. If the letter of credit does not stipulate it, the destination may be filled in. The currency of claim payment should be consistent with the letter of credit to ensure smooth payment.
Q: Does the original insurance policy need to be submitted?
A: Yes, the letter of credit usually requires submission of the original insurance policy. If the full set of originals is required, all must be submitted. Copies are invalid. If the original is lost, you need to apply to the insurance company for reissue.
Q: What should I do if the goods description on the insurance policy is inconsistent with the invoice?
A: It must be consistent with the invoice, bill of lading, and other documents; otherwise, the bank may refuse payment. If it has already been issued, you need to contact the insurance company to amend it. After amendment, it must be resubmitted to ensure consistency between documents.
📝 Sample
[Insurance Policy - Complete Filling Sample]
Policy No.: PICC-SH-2026-0915-00873
Insured: Shanghai Sunrise Import & Export Co., Ltd., 88 Century Avenue, Pudong New Area, Shanghai, China
Amount Insured (in figures): USD 121,000.00
Amount Insured (in words): US DOLLARS ONE HUNDRED TWENTY-ONE THOUSAND ONLY
Coverage: ALL RISKS AND WAR RISK AS PER OCEAN MARINE CARGO CLAUSES OF THE PEOPLE'S INSURANCE COMPANY OF CHINA (1/1/1981) AND WAR RISK CLAUSES (1/1/1981)
Description of Insured Goods: 100% COTTON MEN'S SHIRTS, 5,000 PCS, PACKED IN 250 CARTONS, N.W.: 2,500 KGS, G.W.: 2,800 KGS, MARKS: SSIE/HAMBURG/NO.1-250
Conveyance: M/V "COSCO SHIPPING ROSE" VOY. 026E
Sailing Date: 2026-09-15
From/To: FROM SHANGHAI, CHINA TO HAMBURG, GERMANY VIA SINGAPORE
Claim Payable At: HAMBURG, GERMANY IN USD
Date of Insurance: 2026-09-10
Signature of Insurer: PICC Property and Casualty Company Limited, Shanghai Branch
Endorsement by Insured: SHANGHAI SUNRISE IMPORT & EXPORT CO., LTD. (signed)
Special Conditions: WAREHOUSE TO WAREHOUSE CLAUSE INCLUDED; FRANCHISE NIL; THIS POLICY IS SUBJECT TO THE "BOTH TO BLAME COLLISION CLAUSE"
Number of Originals: TWO (2) ORIGINALS
The above is a sample. Actual completion shall be subject to the requirements of the L/C/contract/importing country.
[Insurance Policy - Complete Filling Sample]
Policy No.: PICC-SH-2026-0915-00873
Insured: Shanghai Sunrise Import & Export Co., Ltd., 88 Century Avenue, Pudong New Area, Shanghai, China
Amount Insured (in figures): USD 121,000.00
Amount Insured (in words): US DOLLARS ONE HUNDRED TWENTY-ONE THOUSAND ONLY
Coverage: ALL RISKS AND WAR RISK AS PER OCEAN MARINE CARGO CLAUSES OF THE PEOPLE'S INSURANCE COMPANY OF CHINA (1/1/1981) AND WAR RISK CLAUSES (1/1/1981)
Description of Insured Goods: 100% COTTON MEN'S SHIRTS, 5,000 PCS, PACKED IN 250 CARTONS, N.W.: 2,500 KGS, G.W.: 2,800 KGS, MARKS: SSIE/HAMBURG/NO.1-250
Conveyance: M/V "COSCO SHIPPING ROSE" VOY. 026E
Sailing Date: 2026-09-15
From/To: FROM SHANGHAI, CHINA TO HAMBURG, GERMANY VIA SINGAPORE
Claim Payable At: HAMBURG, GERMANY IN USD
Date of Insurance: 2026-09-10
Signature of Insurer: PICC Property and Casualty Company Limited, Shanghai Branch
Endorsement by Insured: SHANGHAI SUNRISE IMPORT & EXPORT CO., LTD. (signed)
Special Conditions: WAREHOUSE TO WAREHOUSE CLAUSE INCLUDED; FRANCHISE NIL; THIS POLICY IS SUBJECT TO THE "BOTH TO BLAME COLLISION CLAUSE"
Number of Originals: TWO (2) ORIGINALS
The above is a sample. Actual completion shall be subject to the requirements of the L/C/contract/importing country.
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⚠️ This page is for reference only. Customs regulations may change; please refer to the latest announcement of local customs brokers or customs authorities.