Marine Insurance Certificate vs Policy: What Your Buyer and the LC Actually Need
Under CIF and CIP the seller insures the cargo, and banks are strict about the proof. The difference between an insurance policy, a certificate and a cover note, plus the 110% rule.
A marine insurance policy is the full insurance contract. A marine insurance certificate is issued per shipment under an open cover (annual) policy and proves that shipment is insured. Banks accept either under UCP 600, but not a broker's cover note. Unless the credit says otherwise, cover must be at least 110% of the CIF or CIP value and dated no later than shipment.
If you sell on CIF or CIP, insurance is your job, and the document proving it becomes part of the set the buyer or bank examines. Getting the type, amount or date wrong is one of the common LC discrepancies.
Policy, certificate and cover note: the difference
| Document | What it is | Accepted under an LC? |
|---|---|---|
| Insurance policy | The full contract for a single shipment (specific policy) or for many (open policy) | Yes |
| Insurance certificate | Issued per shipment under an open cover, summarising the cover for that consignment | Yes |
| Declaration under open cover | The exporter's declaration of a shipment under an open cover, pre-signed by the insurer | Yes, if the credit allows |
| Cover note | A broker's or agent's provisional note that cover has been arranged | No, under UCP 600 |
Regular exporters usually take an annual open cover. Each shipment is then declared, and a certificate is issued in minutes rather than a new policy each time. UCP 600 also accepts a policy in place of a certificate or declaration, so if you have a specific policy, you can present that.
When you need marine insurance as an exporter
- CIF: the seller must insure. Incoterms 2020 requires minimum cover equal to Institute Cargo Clauses (C).
- CIP: the seller must insure, with the higher Institute Cargo Clauses (A) all-risks cover by default under Incoterms 2020.
- FOB, FCA, CFR and others: insurance is the buyer's concern, though you may still want cover until risk passes.
- Letter of credit: if field 46A lists an insurance document, it's required whatever the Incoterm.
See FOB vs CIF: which documents you need for how the rest of the set changes.
The 110% rule and other LC requirements
- Amount: at least 110% of the CIF or CIP value if the credit doesn't state a percentage. The extra 10% covers the buyer's expected profit.
- Currency: the same currency as the credit.
- Date: no later than the shipment date, unless the document shows cover effective from a date no later than shipment.
- Issuer: issued and signed by an insurance company, underwriter or their agent or proxy.
- Risks: exactly the risks or clauses the credit names, such as ICC (A), war and strikes.
- Endorsement: if made out to the exporter or to order, endorsed in blank so the claim right can pass to the buyer.
- Originals: all originals presented, if more than one was issued.
Details to cross-check against the rest of the set
The insurance certificate repeats data from other documents: vessel or flight, ports, goods description, marks, packages and invoice value. These must not conflict with the invoice, packing list or bill of lading. Issue the certificate once the B/L details are final, not from the booking.
For a field-by-field look at the document itself, see the marine insurance certificate guide.
Frequently Asked Questions
What is a marine insurance certificate?
A document issued by an insurer, usually under an open cover policy, confirming that a specific shipment is insured, for how much and against which risks. It lets the buyer claim if the cargo is lost or damaged.
Is an insurance certificate the same as an insurance policy?
No. The policy is the full contract; the certificate evidences cover for one shipment under that contract. UCP 600 accepts a policy in place of a certificate, but not a cover note.
Why is cargo insured at 110% of CIF?
The extra 10% is a long-standing market practice to cover the buyer's expected profit and incidental costs. UCP 600 uses 110% of CIF or CIP as the minimum when the credit is silent.
Who issues the marine insurance certificate in a CIF shipment?
The seller arranges cover and the insurer or its agent issues the certificate, which the seller then sends to the buyer or presents to the bank.
Bilexor carries the invoice value, Incoterm, ports and goods details on one shipment record, so the figures you give your insurer match the invoice and packing list. Get early access. Informational only; confirm cover with your insurer and bank.
Informational only — not legal, banking, tax, or customs advice. Always verify document and LC requirements with your bank, CHA / customs broker, and buyer before presentation.