Documents
Letter of indemnity
LOI
Meaning
A letter of indemnity (LOI) is a charterer's promise to compensate the owner for any loss from delivering cargo without original bills, or at a changed port.
Also written as LOI without bills
Letter of indemnity explained
In the oil trade, owners routinely discharge cargo against an LOI because the original bills are still moving through banks. Many charters oblige the owner to accept one in a standard wording, often the International Group of P&I Clubs' form, sometimes countersigned by a bank.
An LOI is only as good as the company that gives it, so owners check the charterer's financial standing.