Basket Clause Law and Legal Definition
Basket clause is a provision in article one section 8, clause 18 of the U.S. Constitution, which permits Congress to make laws necessary and proper for the execution of its enumerated powers. It is also known as necessary and proper clause or elastic clause. The Supreme Court has broadly interpreted this clause to grant Congress implied power to enact any law reasonably designed to achieve an express constitutional power. When used in a contract, basket clause refers to an all-inclusive or comprehensive clause. From an investment point of view, this is a provision that allows insurance companies to invest a small percentage of their assets generally without regard to statutory restrictions. From an accounting point of view, this is a clause that permits life, and health insurers to hold a specified amount of their assets as nonauthorized assets, which are not restricted in the same way as authorized assets.