A GST endorsement clause in an insurance policy that authorises the insurer to reduce payments by the amount of input tax credits to which the insured is entitled operates upon the Value of the insured property (the GST inclusive cost of reinstatement), not upon the Sum Insured. The Sum Insured remains the maximum limit of the insurer's liability. A construction that would reduce the effective Sum Insured to 10/11ths of the stated amount is so surprising as to be rejected as not reflecting the intention of reasonable contracting parties.
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