Letter of Indemnity

Written undertaking — typically by the charterer to the owner — to indemnify the recipient against losses arising from a deviation from contract terms, most often delivery of cargo without production of the original bill of lading at discharge. The LOI is widely used in oil and refined-products trades where the BL has not yet caught up with the cargo; the master takes the LOI in lieu of the BL and discharges to the named consignee. P&I clubs publish standard LOI wording and decline cover for losses arising from delivery without the BL unless the LOI is in approved form and counter-signed by an acceptable bank.