Do I Need Insurance for International Shipments?

Many importers assume that if a shipping line, airline or forwarder loses or damages their goods, they will be paid the full value. In most cases, they will not. Carrier liability is limited by law and contract, and often covers only a small fraction of what your cargo is worth.

So, do you need insurance for international shipments? For almost every commercial shipment, yes. This guide explains why, how cargo insurance works, and what Nigerian importers need to know.

Key takeaways

• Carrier liability is capped, for example at 26 SDR per kg for air cargo, often far below the value of your goods.
• Institute Cargo Clauses (A) gives the widest "all risks" cover.
• Imports into Nigeria are generally required to be insured with a Nigerian-registered insurer.
• Insure at CIF value plus 10% and report damage within strict deadlines.

What can go wrong in transit?

International cargo faces real risks:

• Damage from rough handling, poor stowage or water ingress.
• Theft and pilferage, especially at ports and during inland transport.
• Containers lost overboard in heavy weather.
• Fire, collision or vessel grounding.
• General average, when a ship owner sacrifices cargo or incurs costs to save the vessel, all cargo owners share the cost, even if their goods are undamaged.
• Road accidents during inland haulage.

Without insurance, you carry all of this risk yourself.

Why carrier liability is not enough

Carriers limit how much they pay under international conventions and their terms:

SDR = Special Drawing Rights, an IMF unit whose value changes daily. See ICAO's notice on revised Montreal Convention limits.

On top of these limits, carriers can avoid liability entirely for certain causes, such as "act of God", inherent vice of the goods, or insufficient packing. Proving carrier fault can take months.

Example: 100 kg of smartphones worth US$40,000 damaged in air transit. Under the Montreal Convention limit, compensation might be around US$3,500, if liability is proven.

What is marine cargo insurance?

Marine cargo insurance covers goods against loss or damage during transport by sea, air, road or rail, often from the supplier's warehouse to yours ("warehouse to warehouse").

Most policies are based on the Institute Cargo Clauses (ICC):

• ICC (A), "all risks": the widest cover, protecting against all risks of loss or damage except listed exclusions (such as wilful misconduct, inherent vice, insufficient packing, delay).
• ICC (B): named perils such as fire, sinking, collision, earthquake, water entry and total loss of packages during loading.
• ICC (C): the most basic named perils, such as fire, sinking, collision and general average.

For most manufactured goods, ICC (A) is recommended.

Nigeria's local insurance requirement for imports

Nigerian law has long required goods imported into Nigeria to be insured with a Nigerian-registered insurance company, and your insurance details form part of the Form M process. The Nigerian Insurance Industry Reform Act (NIIRA) 2025 modernised the sector and includes provisions on marine insurance and import insurance, including moves to support insurance-backed alternatives to container deposits.

What this means in practice:

• If your supplier quotes CIF and includes overseas insurance, it may not satisfy Nigerian import requirements.
• Buying FOB or FCA and insuring locally is usually cleaner.
• Check that your insurer is licensed by NAICOM.

Read more about how Incoterms affect insurance in Incoterms explained.

How much does cargo insurance cost?

Premiums are usually a small percentage of the insured value. They depend on:

• Type of goods (fragile, high-theft or perishable goods cost more).
• Route and mode of transport.
• Packing quality.
• Cover level (ICC A, B or C).
• Your claims history.
• Deductible (excess) chosen.

Insured value is normally CIF value plus 10% to cover extra costs such as duty and profit loss.

For most shipments, the premium is minor compared with the value protected, and with the cost of losing a whole consignment.

Single shipment vs open cover

• Single-trip policy, covers one shipment. Good for occasional importers.
• Open cover / annual policy, automatically covers all shipments within agreed limits. Better for regular importers and exporters, with lower admin and often better rates.

When cargo insurance is especially important

• High-value goods (electronics, pharmaceuticals, machinery).
• Fragile goods (glass, tiles, ceramics, equipment).
• LCL shipments handled multiple times.
• Goods moving through several transhipment points.
• Long inland haulage after arrival.
• Goods bought on credit or financed by a bank (lenders often require insurance).

What cargo insurance usually doesn't cover

• Poor or unsuitable packing.
• Delay and loss of market (unless specially added).
• Inherent vice, for example, natural spoilage of produce.
• Normal wear, leakage or weight loss.
• Illegal shipments or misdeclared goods.
• Some war and strike risks, unless added.

Always read the policy wording.

How to make a successful claim

1. Inspect goods on arrival and note any damage on delivery documents. 2. Take photos and keep damaged packaging. 3. Notify the carrier in writing quickly, strict deadlines apply. 4. Notify your insurer immediately.

5. Request a survey where required. 6. Submit documents: invoice, packing list, B/L or AWB, survey report, correspondence.

Full guide: how to handle damaged goods in international shipping.

Frequently asked questions

Is cargo insurance mandatory for imports into Nigeria?

Imports into Nigeria are generally required to be insured with a Nigerian-registered insurer as part of the import process. Confirm current requirements with your bank or forwarder when opening Form M.

Doesn't my freight forwarder's insurance cover my goods?

A forwarder's liability insurance protects the forwarder, within limits. It is not the same as cargo insurance for your goods' full value.

What is general average?

A maritime principle where all cargo owners share costs when cargo is sacrificed or expenses incurred to save the ship. Without insurance, you may need to pay a contribution before your goods are released.

How much should I insure my goods for?

Commonly CIF value plus 10%.

Protect the value of every shipment

DE-BLINGS can arrange appropriate cargo insurance as part of your freight forwarding service, so your goods are covered from pickup to delivery. Get a free quote today.