Insurance Policy

In circumstances where the shipper of the cargo has sold the goods under a Letter of Credit established through a bank or in circumstances where he wishes to obtain payment of his invoice before the consignees obtain the goods, he will pass the original B/L to the bank who, in due course, will arrange presentation to the consignee against payment of the goods. The bill of lading is, of course, considered as a document of title to the goods but the bank has no wish to take actual possession of them but the negotiating of the bills of lading in this way allows the bank to facilitate payment for the goods from the buyer to the seller.  Of course if there were to be a default anywhere along the line the bank could indeed become the actual possessor of the goods but this is only a last resort position. It is, of course, of the utmost importance that the strictest accuracy of the details in the description of the goods should appear on the bills of lading. Credit will be extended on the basis of a bank’s faith in the truth of the stated description of the goods in the bill of lading and any other documentation the letter of credit may demand.  These may include such documents as: The marine insurance policy on the cargo. Invoice for the goods themselves. Any relevant export licences. Consular documents.