The decision the term drives on a new importer is single transaction versus continuous: a single transaction bond secures one transaction, while a continuous bond secures transactions over a one-year period, renews automatically on its anniversary, and remains in effect until terminated, and if an entry type requires a bond and no continuous bond is on file, the entry needs a single transaction bond. The operational risk is insufficiency: a continuous bond is sized against the duties, taxes, and fees of the importer's preceding twelve-month period, CBP periodically reviews every bond on file, and when it judges a bond inadequate it notifies the principal and surety in writing, gives the principal a short window to remedy the deficiency, and may require additional security in the form of a cash deposit or single transaction bonds on the principal's transactions until it is remedied. An insufficient bond is one CBP judges too small to protect the revenue, which is separate from exhaustion: routine duty payments by the principal do not exhaust or reduce the bond. The confusable is cargo insurance: the bond protects the United States government, paying CBP when the principal defaults, and it never pays the importer for cargo loss or damage.
Glossary
Customs Bond
A customs bond is a performance contract between a principal and a surety, with US Customs and Border Protection as the beneficiary, that protects the revenue of the United States by securing payment of duties, taxes, and fees and the principal's compliance with customs law and regulation.