Insurance Policy

Insurance Policy is a formal written document that establishes an insurance contract between the insurer (insurance company) and the insured (policyholder), and is one of the most core documents in foreign trade transportation insurance. In international trade, it is usually obtained by the exporter or importer after applying for insurance with the insurance company according to the insurance clauses stipulated in the contract, and is used to protect against losses caused by natural disasters, accidents, and other events during the transportation of goods. Usage scenarios include trade terms such as CIF and CIP, under which the seller is responsible for arranging insurance, as well as FOB, FCA, and other situations in which the buyer arranges insurance itself. Precautions: The contents of the insurance policy must be strictly consistent with documents such as the letter of credit, bill of lading, and invoice, including the name of the insured, description of goods, insured amount (usually 110% of the invoice value), risks covered, means of conveyance, place of departure and destination, place of claims settlement, etc.; the date of the insurance policy must not be later than the date of the bill of lading, otherwise it may be rejected by the bank. Differences from other terms: An insurance policy is a formal contractual document and is transferable and endorsable; whereas an Insurance Certificate is a simplified version with lower legal effect, and some letters of credit do not accept it; a Cover Note is only temporary proof and cannot replace a formal insurance policy. Foreign trade practitioners need to choose the correct type of document according to the requirements of the letter of credit and ensure that endorsement and transfer are correct.