It goes by many names — Limit per sending, Limit per conveyance or the ancient Per Bottom limit or Limit per bottom.
Not sure if the meaning is clearly understood, not understood or misunderstood by Marine insurance practitioners. In very broad terms, Limit per sending, as stated in a marine open policy, can be defined as the maximum limit of liability which the insurer would assume in respect of goods belonging to the assured carried on a single conveyance. The policy may have a single limit per sending across different modes of conveyance or specify different limits for different modes of conveyance. The assured has to take care to ensure that the limits stated in the policy ( obviously fixed, after discussion with the assured/based on his requirements) are not exceeded, as otherwise he will not get complete protection under the policy. Seems fairly simple? I will just give the gist of three claims which I had seen, to support my earlier statement about the understanding (or lack of it) about this term.
Claim 1:
The assured was to move three identical, expensive machines in knocked-down condition, either on a single truck/trailer or on multiple vehicles depending on the size of vehicle available. Obviously, the movement was between two cities in India.Each of the machine was valued at INR 150 million and since the transits were to happen at different points in time, 3 separate Specific (Trip) policies were issued. Strangely enough,each of the 3 policies showed a limit per sending of INR 70 million even while stating that the value insured was INR 150 million. Limit per sending in a Specific policy?- you may ask. Same question was raised by the assured and the intermediary, to which the response was that since they had internal limitations on approval and limitation in their Treaty, they had to insert this limit, but otherwise full cover was available. Assured and intermediary did not fuss over this,considering the very long relationship with the insurer.
Two of the machines reached the destination safely, multiple trucks carrying parts of the machines in knocked-down condition. The third machine, though in knocked-down condition, all the parts were carried on a single trailer. As ill-luck would have it, the trailer toppled and there was a partial loss to the tune of INR 30 million. Insurer refused the claim citing that the Limit per sending had been breached.
Claim 2:
Assured had an open policy covering exports wherein the limit per sending was stated as INR 5 million. One of the vessels on which the assured’s cargo was carried, declared General Average. When assured approached the insurer for GA guarantee , it was discovered that value of goods belonging to the assured on this vessel was INR 5.5 million, thus breaching the Limit per sending. Insurer declined to give a guarantee and asked the assured to pay a cash deposit and take delivery of his sound cargo.
Claim 3:
Here again, the assured had taken an open policy covering exports. The limit per sending mentioned in the policy was INR 50 million. Assured used to approach the insurer for certificates of insurance for every consignment. The certificates showed the values in US dollars based on the related invoice. It escaped the attention of everyone that the value of one of the consignments, when converted to Indian Rupees would be close to INR 60 million, that is, in excess of the limit per sending stated in the policy. The certificate of insurance was duly assigned to the buyer in the US of A along with the documents of title. There was a total loss to the cargo due to a fire on board the vessel.
Claim was lodged by the buyer in the US of A and the settling agent,on discussing with the Indian insurer discovered the limit per sending as per the policy was INR 50 million only and offered the same in settlement of Total Loss to the Assignee. Pointing to the certificate of insurance, Assignee insisted on payment of the total amount mentioned therein (close to INR 60 million) saying he had no access to the open policy and anyway he would not be bound by its limitations.
Readers may discuss and debate the three cases, as I will not reveal the subsequent turn of events. The aim of the post is merely to draw attention to the fact that something as basic as limit per sending has to be interpreted. No doubt in the cases cited, other procedural errors had crept in, too but the positions taken on limits per sending are widely different in each case.
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Curious to know the answers….interesting case studies and interesting way insurers interpreted the same….would be fun debating these.
Wonderful read Bala….the ‘broadcast’ is casting a spell….gimme more gimme more….
Sir, I had your claim 1 @my group and am posting some of arguments as it is as received…
Reply 1:
Not agreeable – policy had been issued by the insurer after taking into account the entire value and full info was provided by the insured, so the loss up to ₹70 million is definitely payable.
Moreover per sending limit would be applicable to per vehicle rather than per invoice as multiple vehicles/ transits were allowed in policy issuance
Reply 2
Specific policy cannot hv limit per sending. Sum insured declared is the only limit per sending.
Reply 3
Two things to understand:
The coverage details should be accurate, any such verbal commitments from Insurer should not be accepted.
Now coming to the claims.
I believe that prima facie the claims can not be rejected it can be proportionately settled, subject to right vehicle usage.
*BUT*
The claim must be entirely honoured on the basis of below mentioned:
1. Any written communication from Insurer on their limitations, will make the insured eligible for claim.
2. When a specific policy is issued the valuation is declared which itself discloses the value and clarify that it might go on single truck/trailer it’s wrong on the part of insurer to issue policy with valuation less than the Machine Value.
Reply 4
It is absolutely wrong on the part of insurer to mention the PBL in specific policy limiting the value at 70 million, when presumably, client has paid premium for 150 million. Insurer cannot taken recourse to breach of PBL when it is absolutely wrong on their part in mentioning lesser PBL than SI in specific policy. Claim is payable in full as the client has paid premium for full SI ie 150 million. Treaty/ approval limitation are nothing to do with the client it’s inserer’s internal guideline.
Reply 5
If the value of each machine was declared seperately while submitting the proposal by the Insured and the premium was paid accordingly, the liability of the underwriters will be on the value of consignment declared by the Insured.
The limitation of liability by reducing the value of cargo upto the Auto capacity by the Insurer is a serious breach and not acceptable in the eye of law.
Many others answers d arguments received are all of same types..
Request your final verdict pls..
Dear sirs, in Ukraine we consider «Limit per sending» as the max liability of Insurer per one conveyance. But, I see from the reasons of claim`s refusal as per examples of Claims that under «Limit per sending» the Insurer considered something different, what is?