What is the Limit Per Sending in Marine Insurance?

Limit per Sending in Marine Insurance

Limit per sending in marine insurance is also known as PSL in marine insurance. It is the maximum limit of liability that the insurer assumes for goods belonging to the insured that are to be carried through a single transit.

The policy may have a single PSL across different modes of transportation or specifies different limits per sending for different modes of conveyance. The limit per sending in marine insurance is fixed at the time of purchase of the policy based on the various requirements as per the insured.

If at the time of the claim, the value determined is higher than the limits defined as per the policy, the insurer shall have to pay for a rateable proportion of the loss as the Limit Per Sending.

The limit per sending in marine insurance is also referred to as the ‘bottom limit’ or, more commonly, as the ‘conveyance limit’.

Limit per Location in Marine Insurance

The limit per location in marine insurance refers to the highest value an insurer is exposed to at any one location during the transit.

Moving forward, let us also tell you that a marine insurance policy can be broadly divided into two, Open Policy and Specific Policy.

Open Policy v/s Specific Policy

Marine cargo insurance has become more popular these days, mainly because of the increased geographical expansion and ease of doing business especially post-pandemic. However, a persistent and relatively more significant number of threats are faced by businesses during marine transport.

Natural factors like deteriorating conditions of the environment and an increase in the number of instances leading to cyclones and hurricanes have posed potential risks to maritime transport in recent times.

Open Policy: An open policy provides coverage for multiple numbers of transit journeys during the policy term. An open policy benefits large companies with high-volume trade, as buying an insurance policy for each transit may not be feasible.

The insured is required to declare details of all shipments made during the period, the type of goods, transportation modes, destination details, etc. This type of policy generally covers all the transit of the insured till the policy is cancelled, ended or until the last payment realization, whichever is earlier.

Marine Open Policy is based on agreed conditions of “Limit of Liability”. Under these conditions, the insured agrees to the maximum sum insured of the total value of the shipment. This shipment is applied to any one conveyance or any one location.

This is a necessary condition for the insured. The “Limit of Liability” means that the insurer is not liable for the shipment(s) for a sum exceeding this agreed limit.

Thus, the features of the open policy include:

• Multiple transits during the policy term (usually one year)
• Fixed sum insured
• Coverage is decided as per the Limit per Sending
• Coverage is decided as per the Limit per Location

Specific Policy: As the name suggests, the specific policy which is usually known as single transit covers goods in transit for a particular journey. Unlike open policy, this policy is not time-based but ends when the ship or the vessel arrives at the destination.

Both policies cover are available for inland marine insurance (within India), import (from a country outside India to India) and export (from India to a country outside India).

Conclusion

If an entity deals in multiple shipments in a year, it is very difficult and time-consuming to insure goods for each shipment. One can insure all goods in transit in a single open policy for easier handling. Having said that, understanding the role of limit per sending in marine insurance and other related terms is crucial before buying.