A Guide to Marine Insurance Limit Per Sending

The limit per sending, also known as the ‘bottom limit’ or ‘conveyance limit’, acts as a safety net in your marine or cargo insurance policy. It defines the maximum financial compensation you will receive from your insurer if your cargo is lost or damaged during a single shipment.

Let us understand this better with an example.

Imagine you are shipping a container of glassware worth ₹50,00,000. If the limit per sending on your policy is ₹30,00,000 and the container gets wrecked in a storm, your insurer will only reimburse you for a maximum of ₹30,00,000.

Understanding the per-bottom limit in marine insurance is essential to protect your cargo. Choosing an appropriate limit that reflects the value of your shipments can safeguard your business from financial setbacks in case of unforeseen circumstances.

Limit per location, also known as the stock throughput limit or warehouse limit, is another crucial concept in marine cargo insurance. It defines the maximum amount your insurer will cover for the total value of your insured goods stored at any one location during transit.

For instance, you are shipping a container full of electronics to a warehouse in Dubai. The limit per location on your policy is set at ₹10,00,000. While the container is stored at the warehouse, a fire breaks out, destroying all your electronics worth ₹15,00,000.

In this scenario, your insurer would only cover a maximum of ₹10,00,000 as per the limit per location, even though the total loss is higher.

When it comes to marine insurance coverage, there are two main policy structures to consider: Open Policy and Specific Policy. Understanding the differences between these two options will help you choose the one that best suits your shipping needs.

Open Policies

Open policies provide continuous coverage for multiple shipments for a specified period, usually a year, without requiring individual declarations for each shipment. They offer flexibility as they eliminate the need to issue a separate policy for each shipment, allowing for ease of management.

Once the policy is in place, it automatically covers shipments within the specified terms and conditions. The insured declares the total value of all shipments during the policy period, and premiums are calculated accordingly.

Specific Policies

Specific policies provide coverage for a single shipment or voyage. They are valid only for the duration of the specified shipment or voyage, and the policies can be tailored to suit the specific needs of each shipment, including coverage limits, deductibles, and terms.

Each policy is issued separately for every shipment, requiring detailed cargo, vessel, and route declarations. The premium amounts are fixed for each specific policy and are calculated based on factors such as the value of the cargo, the route, and the mode of transport.

With a basic understanding of bottom limits and policy types, you are well on your way to selecting the right marine insurance for your business.

Here are some key tips to guide you:

Assess Your Cargo Value: The first step is to analyse the typical value of your shipments. This will help you determine the appropriate bottom limit per sending. Opt for a limit that reflects the average value of your goods to avoid overpaying for unnecessary coverage.

Do Not Skimp on Coverage: While lower limits can translate to lower premiums, prioritise adequate protection. A high-value shipment exceeding the limit could leave you with significant financial burdens in case of loss or damage.

Consider Shipping Frequency: How often do you ship goods? If you are a frequent shipper with a consistent flow, an Open Policy might be a good fit. It offers flexibility and potentially lower premiums based on the total value declared over a period.

Compare and Contrast Plans: Always do a thorough check of all the marine insurance options that are available in front of you. This will help you find the right policy in no time. Select a reliable insurance provider specialising in marine insurance. Evaluate their financial stability, track record in handling claims, and level of experience in the industry.

The per sending limit in marine insurance plays a key role in safeguarding your cargo during its voyage. By understanding its purpose, advantages, and limitations, you can make informed decisions about your cargo insurance policy.

With Tata AIG’s marine insurance policy in place, you can confidently navigate the seas, knowing your precious goods are protected against unforeseen circumstances.

Should I choose a high or low limit per sending?

A higher limit offers more coverage but comes with a higher premium. Choose a limit that reflects the average value of your shipments to avoid overpaying.

I ship frequently with varying cargo values. Which policy is best?

An Open Policy might be suitable. It allows you to declare the total value of your shipments over a period (usually a year) and adjust premiums accordingly.

What happens if my shipment value exceeds the limit per sending?

If your cargo suffers a loss exceeding the limit, you will be responsible for the remaining cost. Therefore, it is recommended that you regularly review your limit to ensure it reflects current shipment values.

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