Pledge of Insurance

Pledge of Insurance refers to the act in international trade where the insured or the applicant for insurance pledges their right to claim insurance proceeds under an insurance contract as collateral to a bank or other financial institution in order to obtain financing or services such as the issuance of letters of credit. It is commonly used in scenarios such as export bill negotiation, packing loans, and letter of credit negotiation. Usage scenarios include: after shipping goods, an exporter uses an insurance policy (e.g., marine cargo insurance policy) as collateral to apply for short-term financing from a bank. Precautions: 1) Confirm whether the insurance policy is transferable or pledgeable; usually the applicant must endorse it and notify the insurer; 2) During the pledge period, without the pledgee's consent, the applicant may not unilaterally modify or terminate the insurance contract; 3) In the event of an insured loss, the insurance proceeds should be used first to repay the debt. Difference from 'Assignment of Insurance Rights': A pledge transfers only the priority right to receive insurance proceeds, not all rights under the insurance contract; an assignment involves a complete transfer of contractual rights. Similar to 'policy mortgage loan', but pledge of insurance focuses more on the guarantee function in international trade financing.