TRG answers how a certificate of insurance can affect your marine cargo insurance claim.

How Certificates of Insurance Affect Your Cargo Insurance Claim

Certificates of Insurance are often a misunderstood part of marine cargo insurance. TRG explains how this document affects your import and export process, and how it can ultimately affect a claim.

In the world of insurance, there are many terms you may come across that are unfamiliar to the average importer or exporter. This is especially true when it comes to documents or paperwork that are requested by other parties. One of the most misunderstood pieces of paperwork that are often requested without a full comprehension of its effect are certificates of insurance.

Many times an importer or exporter may request this document from their marine cargo insurance provider thinking that it is a form they must have to prove their shipments are insured. However, this is not the actual function of a certificate of insurance and in the majority of cases, the certificate is not necessary at all.

What You Need to Know About Certificates of Insurance

  • What are Certificates of Insurance?
    A Certificates of Insurance (COI) is a document, often generated by the policyholder, for a specific shipment. It guarantees that claims submitted for the subject shipment are payable to the bearer of the original certificate (once signed by the assured and barring non-compliance with a paramount warranty, exclusion, etc.).The COI also provides the specifics of the individual shipment covered by the Certificate. The information included on a certificate include what you named, but also important, are the certificate number, insured value, description of the goods, contractually required wording, and claims instructions.
  • When Does an Importer or Exporter Need Them?
    Certificates of Insurance are mainly used when a letter of credit (LC) is used to purchase goods or for exports to the policy holder’s clients. COIs are often a condition of an LC or are included in the terms of sale. Therefore, there should be little doubt on if a certificate is necessary since you will have agreed to provide them.

How Can Certificates of Insurance Affect Your Claim?

A Certificate of Insurance actually gives rights of insurance over to another party, someone other than the purchaser of the insurance. In regards to filing a claim, it is similar to handing a signed blank check to another party. In the case of a Letter of Credit, the right to file a claim is given to the bank providing the LC. However, for exports, the right to file a claim is given to the purchaser of the goods.

Ultimately, this means is that the claim will be payable to the assignee of the certificate of insurance, not the policyholder, in the event of a claim. However, the claim will count against the policyholder’s claims history.

If all shipments are done with an LC, the client does not need certificates of insurance. Instead, the bank can be named as a Lender Loss Payee on the policy.

Alternatives to Certificates of Insurance

If what you require is simply to prove that you have insurance, a Letter of Insurance can be issued to suit this purpose. In fact, these letters can be issued as a general proof of insurance or they can confirm a single shipment falls within the parameters of the policy.

The following are a couple of examples of situations when a letter of insurance would be sufficient:

  • Carriers often require that importers and exporters prove they have insurance before they will waive their insurance fees.
  • The importer/exporter’s customers want to ensure that if something happens to their cargo, there is an insurance policy in place. This is typical if the policyholder is paying for insurance as part of their selling agreement with the importer/exporter.

If you have not been explicitly asked to provide a certificate of insurance, then you probably only need a Letter of Insurance. If your insurance provider asks if you will require a certificate of insurance, don’t say yes ‘just to be safe’. The request can usually result in a waste of time and money.


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Cargo InsuranceCertificates of Insuranceinternational tradeMarine Cargo InsuranceTRG Marine

Meredith Lambert • January 8, 2019

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