Surety bonds are financial securities issued by bonding or insurance companies to protect a principal in the event that it fails to fulfill its obligations or causes financial loss to a third party.

A Surety Bond is a contract that’s among at least three parties:

• Importer (Principle) – Pays the duty
• US Customs (Beneficiary) – Receives the duty
• Insurance Co (Surety) – Guarantees the importer pays US Customs