Insurance Effective Date

LC VIEWS - Single Window Q&A No. 60 - Mar 26, 2008

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Question from C. D.:
I badly need your advice in the following matter: An insurance certificate has been issued on 15.02.2008 and signed by the insurance company. No effective date of the insurance has been mentioned and therefore at this stage the insurance shall be deemed to be covered as from 15.02.2008. However when looking at document in its entirety, it is mentioned that: “this certificate is not valid unless countersigned by ***”
The doc appears to be countersigned at the date of 29.02.2008. In this situation would you consider the cover is effective from the date of issuance or from the date of countersigning?
Thank you in advance
C. D.

Answer from T. O. Lee:
I have highlighted many many times in my published articles in L/C magazines and in my postings with DC Pro, L/C Views and my website www.tolee.com that the issuing date or date of signing of an insurance document has nothing to do with its effective date.

According to the Duration Clause and the Transit Clause in Institute Cargo Clauses A, B or C, the insurance cover becomes effective as from the occurrence of an event (the commencement of transport) but NOT based on any date in the insurance document.

The good news is:

Now my above opinions are stated in the Commentary on UCP 600, ICC Pub 680, on page 132 as I have told at least two members of the UCP 600 Draft Group, Gary Collyer and Soh Chee Seng verbally the above opinions.

The bad news is:

The UCP 600 Drafting Group still consider that they will determine the effective date of an insurance document based on its issuing date.

Determination of such effective date should not be hijacked by bankers, who do not know cargo insurance in such a depth and breadth to do this task properly. I am anticipating a court case to put us back into the right track. After such a court ruling, the UCP will be interpreted differently.

In the mean time, “To be or Not to be?” That is the question.

Best regards,

T. O.

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