Trade and customs risk has become a recurring operational, finance, and governance issue for many organizations. Higher effective duty rates, additional-duty regimes, multi-year lookbacks, and more targeted enforcement have increased the likelihood that customs disputes will produce material liabilities. Even companies with strong controls, careful analysis, and consistent filing practices can face residual legal uncertainty. And this exposure can result in higher cost of goods sold and lower related profit margins where a company is unable to pass on associated costs to its customers.
This article explains how trade and customs insurance addresses that gap. These policies are structured around a defined customs position under current law and transfer the economic consequences of an adverse outcome (incremental duties, interest, penalties, and defence costs) to one or more A-rated specialty insurers. The article describes common use cases, explains key policy terms and exclusions, and walks through the underwriting process. It also illustrates how these policies are used in practice to support financing, streamline negotiations, and make planning more predictable.
Global Trade and Customs Journal