Letter Of Credit Clause

Summary of Letter Of Credit Clause

A clause in a marine cargo insurance policy designed to protect an exporter until such time as he is paid under a letter of credit. An exporter selling on an F.O.B. or F.A.S. basis, for example, does not provide marine insurance; this obligation is undertaken by the importer. If the purchaser's insurance fails to respond for marine losses (which have not been covered by the exporter), the letter of credit provision of the exporter's policy will ensure that he is paid.

(Main Author: William J. Miller)