Customs Bonds and Cargo Insurance


There is a genuine need for Cargo Insurance. The probability for loss in transit is great. Lloyds has reported that on average, one ship sinks every day. Long voyages averaging thousands of miles, extensive lifting, moving, loading, shifting, thieves and bad weather add substantially to the probability for loss or damage in transit.

Some importers rely on the carrier to pay for losses in transit. That can be a major mistake. Law or tariff restrictions limit the liability of most carriers. Furthermore, most carriers are only responsible for losses which are unforeseeable and beyond their control. Approximately 30% of losses in transit are unavoidable. Most people have never had a claim against their Homeowners Policy but continue to insure their homes. The risks in transit are far greater.

  • I buy CIF, so my shipments are already insured.

A major difficulty with CIF purchases is that the importer can obtain coverage and settle claims only under the terms of the overseas insurance company. Foreign insuring conditions can vary widely from U.S. terms. It is not uncommon to wait for a long time, if ever, for foreign insurance to reimburse the importer. When an importer buys locally they know exactly what they are getting and most claims are normally paid within 30 days. Also, the cost of insurance is often buried in with other charges. What are you really paying? For these reasons, we strong suggest you but C&F or FOB and purchase your cargo insurance from a U.S. insurance company. We can provide cargo insurance through a reputable U.S. insurance company and at affordable, competitive rates.


A Customs Bond (surety bond) is required on all commercial shipments of goods entering the commerce of the United States. According to Customs Regulations, importers are required to post a bond..."to protect the revenue of the United States and to assure compliance with any pertinent law, regulation or instruction." When a Customs Bond is executed, the bond principal agrees to the following conditions:

  • Agreement to pay duties, taxes and charges in a timely manner
  • Agreement to make a complete entry
  • Agreement to produce documents and evidence
  • Agreement to redeliver merchandise
  • Agreement to rectify any non-compliance with provisions of admission
  • Agreement for examination of merchandise
  • Reimbursement and exoneration of the United States
  • Compliance with special requirements on duty-free entries or withdrawals
  • Compliance with U.S. Customs regulations applicable to Customs security areas at airports

Default under a Customs Bond occurs when the principal fails to comply with the conditions of the bond which provide for compliance with the law and Customs Regulations. Defaults result in the assessment of liquidated damages or in the issuance of demands to pay duties, taxes and other charges guaranteed by the bond. If the principal (importer) fails to pay these liquidated damages or other lawful charges assessed by Customs, the surety must pay Customs the appropriate sum up to the bond amount.


With insurance, some losses are expected, and a portion of the premium is set aside to pay losses. With a surety bond, each applicant is reviewed individually, and no portion of the premium is set aside for losses; no surety would knowingly issue a bond for a principal likely to default. A Customs Bond does not protect an importer nor relieve an importer of its obligation to pay amounts due to Customs. When the surety has been forced to pay Customs amounts due under the terms of the bond, the surety has the right to demand reimbursement from the principal.

The importer of record (principal on the bond) is also liable for penalties under Section 592 of the Tariff Act (19 U.S.C. 1592) for material misstatements of fact. Customs bonds do not cover such penalties.

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Brokerage Division
1225 W 190th Street
Suite 340
Gardena, CA 90248
Phone: 310-642-1082
Fax: 310-642-0075

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