What Does A Customs Bond Cover?

Posted by Cbicustom on July 27th, 2019

Importing goods in the United States from foreign countries is nothing short of complexities. The world’s largest import country tries everything to make the process secure and feasible for the traders. However, this has been as complicated as ever. Besides the long list of documents, paperwork, and compliances, the process of freight transport through ocean vessels is not easy. In this article, we will discuss the customs bond.

Customs bonds

A customs bond is like an insurance policy that acts as a contract between three parties i.e. customs, importer, and insurance company for the guarantee of the payment of all duties and fees related to the shipment. Importers who are supposed to import merchandise into the US for commercial purposes that are valued above ,500 are required to obtain a necessary customs surety bond. For commodities that are subjected to other federal agencies or not permitted to enter the land until the consent of relevant agencies.

A commodity subject to other federal agencies requirements such as firearms, food, and animals, you must post a customs bond.

How to get one?

The importers usually contact customs brokers to purchase a customs surety bond. They can also obtain one by directly contacting a surety company that is licensed by the Customs and Border Protection (CBP). The trader who purchases a bond is usually referred to as Principal and CBP act as an obligee.

Before purchasing a bond through a surety company or broker, you must ensure that they are licensed by the Treasury Department. Your surety company would be responsible for any legal actions taken by CBP in case you fail to render payments on time.

Types of Bond

There are two types of bond, Single Transaction Bond and Continuous Customs Bond. When you decide to purchase a Single Transaction Bond, it is valid only for a single shipment. But most of the businesses require multiple entries in a single year at different ports of entry.

A continuous customs bond is the best option if you tend to do multiple imports in a single year. It gets renewed automatically after the period of one year and terminated once the principal submits a request to CBP for the termination of continuous bond. As an importer, you can make adjustment in the bond price according to the requirements.

The amount of the continuous customs bond is a minimum sum of ,000 or 10% of the overall taxes and fees paid over the course of the last 12-month period. The amount of the continuous customs bond is a minimum sum of ,000 or 10% of the overall taxes and fees paid over the course of the last 12-month period. A single entry bond amount is decided upon the calculation of the total value of the merchandise and is never less than 0, as per the CBP rules. You can get more information about the customs bond by contacting one of the brokers or freight forwarding companies.