New cargo and bond limits for SDDC’s first open season since 2006!

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New Cargo Limit is $500,000

New Bond Limit is $500,000


The military Surface Deployment and Distribution Command (SDDC) is looking to increase capacity and will hold the first open season in the fall of 2013 since 2006.

Open season is a time for household goods movers to apply for Transportation Service Provider (TSP) status. This can result in a great deal of enthusiasm to allow new candidates an opportunity to apply for entry into the Department of Defense Personal Property Program.

SDDC also drafted new DOD Personal Property Qualification Rules (also called pamphlet 55-4) which, if passed, will take effect May 2014. Some of the new qualification rules include increases in the minimum Performance Bond and Cargo limits carried by the TSP.

As an underwriting facility for approximately 1,200 movers in the United States, Mover’s Choice and Paul Hanson Partners has ben asked by many of our brokers and insureds to comment on the proposed SDDC changes with respect to bonds and cargo limits..



Cargo: Minimum required limit increasing from $150,000 to $500,000

A new aggregate cargo limit is necessary because most claims filed with insurance carriers on military SIT shipments are settled on the Inland Marine policy under Cargo and not Warehouse Legal Liability.

Most movers already carry a higher aggregate cargo limit than their per occurrence cargo limit (for example, a typical policy will include a per truck limit of $200,000 and per occurrence limit of $400,000), and many already carry the proposed minimum $500,000 limit.

Increasing the aggregate from $150,000 to $500,000 will likely raise the annual cargo premium by 10-15%. There should not be a problem obtaining the $500,000 limit in the insurance marketplace unless the TSP has severe or adverse loss history.



Bond Requirements: Minimum $250,000 for Domestic TSPs and $500,000 for International TSPs

Since the recession and downturn of 2008-2010, we have witnessed a large number of firms using built up equity to sustain their business.

Although the economy has improved, there has not been time to rebuild to the levels of equity that were in the market in 2008. Bond underwriters look for the TSP or indemnitor of the bond to be able to quickly, with cash, repay the bond if it is called.

In addition to requiring positive profits that are at or above average, bond underwriters will require:

  • Up to 2 times the bond limit in combined net worth
  • Net Quick Ratio of 1:1
  • Minimum Requirement will be CPA complied financial
  • Debt to equity ratio no greater than 3:1 and profitable 3 out of prior 4 years
  • Credit score of owner of at least 670 and no prior losses to

With these, bond companies will look for a minimum of $500,000 of equity in liquid assets for domestic TSPs and $1,000,000 for international TSPs.

If the TSP and/or indemnitor do not meet these requirement, then a substandard bond market or complete lack of options could exist.

Substandard bond companies will charge a premium on the bond of as much as 10-15% of the bond value. They will require collateral of property, homes and other non liquid assets of the indemnitor.

Assuming the TSP and/or indemnitor has the equity, the additional limit of these new bonds will cost on average 2-5% of the new and increased additional limit.



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