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Frequently Asked Questions

1. Does "All Risk" in my cargo policy mean my policy covers everything?

No. Normally, approved general merchandise is insured "all risk." This means that coverage is extended to cover physical loss or damage from any external cause, subject to your cargo policy exclusions, terms, conditions and deductibles. The following are standard exclusions (things that are not covered) for all risk coverage:

  1. Improper Packing
  2. Abandonment of Cargo
  3. Rejection by Customs
  4. Failure to pay or collect accounts
  5. Inherent vice
  6. Employee conversion or dishonesty
  7. Loss because of delay or loss of market
  8. Losses in excess of policy limit
  9. Losses in South America more than 60 days after discharge from overseas vessel or aircraft
  10. Losses at port city more than 15 days after discharge from overseas vessel or aircraft
  11. Losses inland more than 30 days after discharge from overseas vessel or aircraft
  12. Barge shipments
  13. Goods subject to on-deck bills of lading
  14. Loss caused by temperature or pressure (air shipments only)
  15. Failure to notify air carrier of preliminary loss in timely fashion: Obvious damage - 7 days Hidden damage - 14 days Non-delivery - 120 days
  16. Failure to notify steamship line of preliminary loss within one year of ocean bill of lading date.
2. What does "F.P.A." mean?

F.P.A. stands for Free of Particular Average. This means that the coverage is very limited and on a "named perils" basis. F.P.A. named perils are such as the sinking, burning, stranding, collision of vessel or catastrophic perils on shore. Shore perils include such events as earthquakes, derailment, collapse of dock, fire, etc. Under a policy written F.P.A.; nothing else is covered unless specifically stated. Always refer to your policy's exclusions, terms, conditions and deductibles

3. Why do I need to sign a personal indemnity on my bond; isn't that what the insurance is for in case of a claim?

A bond is not an insurance policy but a financial guarantee placed on your behalf to a third party, i.e. US Customs or Federal Maritime Commission. The insurance company providing the bond is known as the surety. Should they have to pay out a claim then they have the right of recovery from you.

4. Why must my spouse sign the indemnity agreement?

The surety, or bonding company, will not issue a bond unless they are assured that they can recover their money if they must pay a claim. This is also why the sureties require comprehensive financial statements. Having your spouse sign the agreement protects the surety by giving them another party to whom they can turn for payment if you should default on your obligation. For example, if a couple gets divorced and one spouse takes all the money and there is a claim; the surety could go after the one with the funds.

5. Why have a bond if they can recover from us anyway?

Without a bond, you would have to come up with the bond amount in cash, i.e. $50,000 or $75,000 or the amount stated by the governing agency to meet their requirements for licensing or clearing of goods, etc.

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Global Insurance Network, 8350 NW 52nd Terrace, Suite 418, Doral, FL 33166
Phone: (305) 599-0900     Fax: (305) 599-1114

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