Provisional Insurance

Provisional Insurance is a temporary arrangement in foreign trade cargo transportation insurance, referring to a short-term, temporary insurance certificate that the insured obtains from the insurance company before the formal policy is issued. It is typically used in the following scenarios: 1) The letter of credit requires an insurance policy, but the goods have already been shipped and the formal policy has not yet been issued; 2) The buyer and seller have reached a deal but the insurance terms have not been finalized; 3) For partial shipments, each batch of goods needs temporary insurance. The coverage, risks covered, and amount of provisional insurance are usually consistent with the final policy, but the validity period is shorter, generally terminating upon the issuance of the formal policy. Notes: Provisional insurance only provides transitional protection; if the formal policy is not issued in time, there may be a coverage gap; some letters of credit do not accept provisional insurance certificates, so it is necessary to confirm with the bank in advance. Unlike a Cover Note, provisional insurance usually has enforceable legal effect, while a cover note is merely proof of intent; unlike Open Cover, provisional insurance is a temporary arrangement for a single transaction, not a long-term agreement.