Customs periodically monitors the sufficiency of active bonds they have on file. If Customs finds that an active Importer bond is not sufficient based on the import activity of the principal, they will provide a sufficiency notice to the principal requiring the bond to be rewritten at a higher amount. When sending this notice to the principal, a copy of the notice is also provided to the surety on the bond. The principal is generally given 30 days to comply with this letter. Failure to comply with this letter will result in the bond being deemed unusable.
Customs also monitors the sufficiency of other types of bonds, including the International Carrier bonds, or the 301-3. Just recently, Customs had a review of the active International Carrier bonds on file and provided sufficiency notices to many principals, requiring the bonds to be re-written at higher amounts within 30 days. Because Customs did not copy or noitfy the surety (this is typical of their historic practice) on this notice, most of the bonds did not get rewritten in time to meet this deadline, which resulted in some princpals having difficulty using their bonds.
Therefore, if one of your accounts receives a sufficiency notice from Customs, it is extremely important that they act on this letter immediately, as it does take time to obtain a new bond. It is in the best interest of the principal to work on obtaining the new bond at the higher amount immediately once the letter is received, to make sure they don’t experience a lapse in coverage.
Fortunately, due to Shea’s constant and direct access to Customs, the issue of notice to the surety has been addressed and Customs has agreed to notify both the surety company and principal on the bond, in the event a bond is deemed insufficient. If the principal is unsure as to whether or not the surety has been notified, please contact our office as soon as possible so that they do not experience any lapse in coverage.
Finally, it is also important that the principal ensures the mailing address on file with Customs is the correct address. If the principal’s mailing address on file is not correct and Customs mails the sufficiency notice to the principal and does not provide a copy to the surety company, the principal’s bond could be deemed insufficient without the principal’s or surety’s knowledge of the required increase.
If you have any questions concerning the mailing address on file for a principal or if you have any questions concerning the sufficiency process, please contact our Bond Department.