A customs bond is a type of insurance required for commercial imports in the United States. While it is said in many writings that customs bonds are like insurance documents, they are dissimilar in many ways in comparison to normal car insurance.
Ultimately, they are a financial guarantee between three parties:
- Insurance/Surety/Broker issuing the bond
- The importer (principal)
- The US Customs and Border Protection (CBP)
In an event, if the importer fails to pay duties, taxes, and fees levied on the merchandise, the CBP would be able to collect reimbursement up to the total bond amount. There are many other policies and procedures needed to be familiarized by the new importers and exporters in order to avoid long delays and problems in the clearance of their merchandise.
What is a Continuous Bond?
A continuous customs bond is a type of bond that covers all imported shipments done within a period of one year. It is an essential document to bring goods in the US and can be purchased from a licensed surety company or customs brokers. In most cases, the amount of the bond must be at least 10% of the total duties and taxes paid to CBP annually at a minimum of $50,000.
It is renewable
A continuous customs bond is a renewable bond that does not automatically cancelled until requested by the person who filed the bond (or until the termination request by any of the other two parties – surety, CBP). This is the best feature of this bond that it reduces a lot of stress from frequent importers. They don’t need to file for a bond again every next year and just required to contact the company which issued the bond and need to pay the general renewal fee.
Other Types of Bonds
The most common types of bonds are Import Bond, Foreign Trade Zone Bond, Drawback Bond, Custodian Bond, and International Carrier Bond. Each of these bonds has different specifications and requirements.
A Single Entry Bond can be seen as a potential alternative to a continuous bond. It covers only one import transaction. A single entry bond amount is generally less than the total value of merchandise plus duties, taxes, and fees. For goods that are subjected to other federal agencies’ requirements such as food and animals, importers need to obtain additional bonds.
Most of the brokers and surety companies charges between $350 and $500 for a continuous bond. An importer can check several websites of brokers to ensure he gets the customs bond at more competitive prices.
For Freight Forwarders and NVOCCs
All ocean freight forwarders (OFFs) and non-vessel-operating common carriers (NVOCCs) who wish to operate as licensed Ocean Transportation Intermediaries (OTIs) in the US are required by the Maritime Commission (FMC) to obtain OTI Bonds NJ. It binds the licensed OFFs and NVOCCs to comply with FMC’s regulations and requirements. OTI bonds are also an agreement between three parties – OFF or NVOCC (principal), FMC, Shippers and Carriers (Obligee), and Surety that issues the bond.
For more details of customs bonds, you may contact reputed surety companies.
