A Customs bond is a contract that insures the performance of an obligation or obligations imposed by law or regulation. A bond is a backing from a surety bond producer that will pay the U.S. Customs Service if a required act is not performed. It is a way that U.S. Customs can collect fees or fines when legal and regulatory obligations have not been met.
A Customs bond is not a traditional insurance policy; it is a financial backing and guarantee from a surety company. In a traditional insurance policy, the insurance company assumes that the premiums it collects will be paid out in losses. With a Customs bond, the premiums you pay are considered “service fees” for the financial backing and guarantee from the surety company. The surety company will guarantee payment to U.S. Customs any obligations or fees that you may owe because of improper processing and then collect those obligations or fees from you.
When a Customs Bond is Needed
Title 19 U.S.C. 1623 gives the U.S. Customs the right to require bonds. All international Part 135 charter operators are required by Customs to be bonded. The type of Customs bond needed is called an “International Carrier Bond” and is available as a single entry bond or a continuous bond. Single entry bonds are for a single shipment, or a one-time import. Continuous bonds are normally for an importer who will have a large number of entries through ports of entry during a given year.
Obtaining a Customs Bond
Contact an insurance underwriter and tell them you need a surety bond known as an International Carrier Bond. Surety bond producers are a part of the broader insurance underwriting industry. An International Carrier Bond is one type of a Customs bond that surety bond producers cover. A list of surety companies can be found at the U.S. Bureau of the Fiscal Service.
Insurance companies should know the procedure for getting a bond, or be able to access that information. To underwrite the bond an insurance company will require the liability amount as well as some background financial information. The insurance company will fill out Customs Form 301 and send it to U.S. Customs. Customs will verify the information on the form, enter your data into a national database, and then assign you a nine-digit bond number. You will provide this number on any Customs paperwork where it is required or when asked for it by an Inspector.
The Liability Amount Needed
Different U.S. Customs port directors may give different answers to the liability amount needed. The liability amount may vary depending on your region and different types of merchandise being imported. Typical liability amounts can range from $50,000 to $100,000. Yearly service fees can range from $7.50 per $1,000 of coverage to $10 per $1,000 of coverage.