Cargo Insurance Certificate and Policy: A Practical Guide
Cargo insurance certificate explained: policy vs certificate vs cover note, CIF and CIP rules, 110% insured value, endorsement, claims and UCP 600 article 28.
Key takeaways
- An insurance certificate proves that a specific shipment is insured under a policy, usually an open cover.
- Under CIF the seller must insure at least Institute Cargo Clauses (C); under CIP at least clauses (A); both for 110% of the price.
- Banks reject cover notes and want the insurance document dated no later than shipment, in the credit's currency, for at least 110%.
- The certificate is endorsed so that the buyer, who bears the risk in transit under CIF or CIP, can claim.
- Its voyage, goods, marks and value must agree with the bill of lading and the invoice.
A container falls overboard, a truck is hijacked, a pallet of tiles arrives crushed. The carrier's liability is limited, sometimes to a fraction of the goods' value, and often excluded altogether. Cargo insurance fills the gap — but only if the right document exists, names the right party, covers the right voyage and risks, and can be produced when the loss happens. Under CIF and CIP sales and many letters of credit, that document is also a condition of payment.
This lesson explains the forms an insurance document takes (policy, certificate, declaration, cover note), what the Incoterms rules require, what the certificate must contain, how it is endorsed and used to claim, and the precise rules banks apply under UCP 600 article 28. The insurance cover itself — the Institute Cargo Clauses (A), (B) and (C) and their exclusions — is explained in cargo insurance.
Policy, certificate, declaration and cover note
| Document | What it is | Accepted under UCP 600? |
|---|---|---|
| Insurance policy | The contract itself, for one voyage or as an open cover for all shipments over a period | Yes, and instead of a certificate or declaration |
| Insurance certificate | Issued under an open cover for one shipment, stating its details; transferable by endorsement | Yes |
| Declaration under an open cover | The insured's declaration of a shipment under the open cover, often countersigned by the insurer | Yes, if signed by the insurer or its agent as required |
| Cover note | A broker's or insurer's provisional confirmation that cover is arranged | No |
Regular exporters usually hold an open cover (or open policy): a contract under which every shipment in a defined trade is automatically insured on agreed terms, with a certificate issued per shipment, often from the insurer's online platform.
Who must insure, and for how much?
Under Incoterms® 2020, only two rules oblige the seller to insure:
| Rule | Minimum cover | Minimum amount | Seller must provide |
|---|---|---|---|
| CIF | Institute Cargo Clauses (C) or similar | 110% of the contract price, in the contract currency | Policy, certificate or other evidence of cover |
| CIP | Institute Cargo Clauses (A) or similar | 110% of the contract price, in the contract currency | Policy, certificate or other evidence of cover |
Cover must run at least from the point of delivery to the named destination, and the buyer must be able to claim directly from the insurer. Under the other rules, there is no insurance obligation; each party insures its own risk if it chooses, and many sellers insure under FOB or FCA anyway (seller's contingency cover) to protect themselves until the buyer pays. The buyer can ask for wider cover (clauses (A) instead of (C) under CIF, war and strikes clauses), usually at its expense.
What an insurance certificate contains
| Field | Explanation |
|---|---|
| Certificate number and open policy number | Links the certificate to the contract |
| Insured (assured) | Usually the seller under CIF/CIP; the buyer or bank if agreed |
| Endorsement | Blank endorsement or 'to order of [bank]' as required |
| Conveyance | Vessel, flight or truck; 'and/or other vessels' where transhipment is possible |
| Voyage | From (place of taking in charge or port of loading) to (port of discharge or final destination) |
| Goods | Description, packages, marks and numbers, as on the invoice and bill of lading |
| Insured value and currency | E.g. 110% of CIF value, in the credit's currency |
| Conditions | Institute Cargo Clauses (A), (B) or (C), war and strikes clauses, any special clauses |
| Excess or deductible | Amount the insured bears per claim |
| Claims payable at / by | Place and agent where claims are settled, and in which currency |
| Survey agent | Who to call for a survey at destination |
| Date and place of issue | Must be no later than shipment, or show cover from shipment |
| Signature | Insurer, underwriter or authorised agent; number of originals issued |
Worked example: transformers to Douala
An Algerian electrical equipment maker sells four distribution transformers to a Cameroonian utility contractor, CIF Douala, Incoterms® 2020, for EUR 250,000.00, payable by letter of credit. The credit requires: 'Insurance certificate in duplicate, endorsed in blank, for 110% of invoice value, covering Institute Cargo Clauses (A), Institute War Clauses (Cargo) and Institute Strikes Clauses (Cargo), claims payable in Douala in EUR'.
| Field | Entry |
|---|---|
| Certificate | Issued under the exporter's open cover, 20 March 2026 |
| Insured | The Algerian exporter, endorsed in blank on the reverse |
| Voyage | From the factory warehouse in Algeria to the consignee's warehouse in Douala, via Algiers port |
| Conveyance | Named vessel and/or connecting vessels |
| Goods | 4 distribution transformers in wooden crates, marks DLA/TR-26/1-4, gross 18,400 kg |
| Insured value | EUR 275,000.00 (110% of EUR 250,000.00) |
| Conditions | ICC (A) 1/1/09, Institute War Clauses (Cargo), Institute Strikes Clauses (Cargo) |
| Claims | Payable in Douala, in EUR, through the named claims agent |
| Originals | Two originals issued, both presented |
| Date | 20 March 2026; bill of lading on board date 21 March 2026 |
At a premium rate of 0.25%, the insurance costs EUR 687.50, a cost the exporter built into its CIF price. When one crate is found damaged at Douala, the buyer, holding the endorsed certificate, calls the survey agent, lodges a written claim with the carrier within the time limit and claims from the insurer with the certificate, invoice, bill of lading, packing list and survey report.
The insurance document under a letter of credit
UCP 600 article 28 is precise:
- Issuer and signature: issued and signed by an insurance company, an underwriter or their agents or proxies; an agent or proxy signature must say for whom it signs.
- Originals: if the document says it was issued in more than one original, all originals must be presented.
- Type: cover notes are refused; a policy is acceptable in place of a certificate or declaration.
- Date: no later than the date of shipment, unless the document shows that cover is effective from no later than that date.
- Currency and amount: the currency of the credit; the amount required by the credit or, if none, at least 110% of the CIF or CIP value. If that value cannot be determined from the documents, the minimum is 110% of the amount for which payment is requested or of the gross value of the goods on the invoice, whichever is greater.
- Coverage: at least from the place of taking in charge or shipment to the place of discharge or final destination stated in the credit.
- Risks: those required by the credit. If the credit asks for 'all risks', any document with an 'all risks' notation or clause is accepted, even if it says certain risks are excluded. If the credit uses vague terms such as 'usual risks', the document is accepted whatever risks it does not cover.
- Exclusions and excess: the document may refer to exclusion clauses and show a franchise or excess.
The assured and endorsement must follow the credit; if the credit is silent, ISBP 821 expects the document to be issued or endorsed so that the right to claim passes to, or can be exercised by, the bank or the buyer. Learn how credits work in letters of credit explained.
How it must agree with the other documents
- Voyage, ports and vessel must agree with the bill of lading; 'and/or other vessels' covers transhipment.
- Marks, packages, description and weights must not conflict with the invoice and packing list.
- The insured value must be computed on the invoice's CIF or CIP value, in the same currency.
- The date must not be later than the on board date unless cover is stated to start earlier.
Common mistakes
- Insuring 100% of the invoice instead of 110%.
- Presenting a broker's cover note or a quote instead of a certificate.
- Issuing the certificate after shipment without a 'cover effective from' clause.
- Forgetting to endorse a certificate made out to the seller, so the buyer cannot claim.
- Insuring in USD when the credit is in EUR.
- Choosing clauses (C) under CIF for fragile goods without telling the buyer, who then discovers that breakage is not covered.
Frequently asked questions
What is the difference between an insurance policy and an insurance certificate?
The policy is the contract between the insured and the insurer, often an open cover for all shipments over a period. The certificate is issued under that policy for one shipment, stating the goods, voyage, value and conditions; it gives the holder the right to claim. Under UCP 600 a policy is acceptable instead of a certificate, but not the reverse.
Why is cargo insured for 110% of the invoice value?
The extra 10% traditionally covers the buyer's additional costs and expected profit if the goods are lost. Incoterms 2020 requires at least 110% of the contract price under CIF and CIP, and UCP 600 applies 110% of the CIF or CIP value when a credit does not state the amount.
Who can claim under a cargo insurance certificate?
The insured named on the certificate, or anyone to whom it has been endorsed, provided they have an insurable interest when the loss occurs. Under CIF and CIP the seller is usually the insured and endorses the certificate in blank so the buyer can claim for losses after delivery on board or to the carrier.
Is a cover note accepted under a letter of credit?
No. UCP 600 article 28(c) states that cover notes will not be accepted. Present an insurance policy, an insurance certificate or a declaration under an open cover, issued and signed by an insurer, underwriter or their agent or proxy.