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What Is Export Goods Insurance?

Export goods insurance is a contract (policy) you buy from an insurance company so your exported goods are protected. If something bad happens—damage, theft, loss at sea, non‑payment—then the insurer pays (compensates) under certain conditions.

Key terms to know:

• Policy: the insurance contract.

• Premium: the money you pay for the policy.

• Sum insured: the maximum amount the insurer will pay if the insured risk happens.

• Deductible / excess: amount you must cover yourself before insurer pays.

• Risk / peril: events that may cause loss—like fire, theft, sink, storm, pilferage.

• Transit: moving the goods from point A to B, e.g. from your factory, to port, then ship, then to buyer’s destination.

So export goods insurance helps reduce risk and financial loss when you send goods from Nigeria to another country.

Why Nigerian Exporters Need to Insure Their Goods (Importance & Benefits)

Exporting is risky. Shipping across borders, dealing with carriers, customs, sea storms, theft, delays—all these can cause loss. Here are reasons Nigerian exporters benefit from insurance.

 Protecting Against Physical Loss or Damage

Goods may be damaged on the road within Nigeria, at port, while at sea or air, or during unloading. Without insurance, you pay all losses. Insurance covers damage or loss in transit, at sea, theft, pilferage, fire, etc.

Minimizing Financial Loss from Non‑Delivery or Non‑Payment

Sometimes goods arrive, but the buyer does not pay. Or documents are wrong so banks refuse payment. Some insurance (credit insurance / export credit guarantee) helps protect you from buyer default or country risk (where buyer’s country prevents you from receiving payment).

 Meeting Contract Terms and Incoterms

Many export contracts require certain insurance, especially under Incoterms like CIF (Cost, Insurance, Freight), CIP, etc. If your contract says you must insure until destination port or buyer’s warehouse, you must purchase insurance accordingly.

Gaining Confidence and Access to Better Buyers / Markets

Buyers abroad are more willing to deal with exporters who insure goods. It signals professionalism and lowers their risk. You may get better prices or better contract terms if goods are insured.

Protecting Reputation and Business Continuity

If something goes wrong (lost goods, damaged goods), and you cannot deliver or refund, your reputation suffers. Insurance helps you recover and continue business without total loss.Types of Insurance for Exported Goods (Kinds & What They Cover)

Here are main types of insurance and coverage options that exporters from Nigeria should know. For each type, I will say what it covers, what it does not cover, and when you need it.

How to Buy Export Goods Insurance (Step‑by‑Step Guide)

Here is how you, a Nigerian exporter, can get insurance for your goods in export‑trade.

Step 1 – Assess Your Export Value and Risk

• List the goods you are exporting: type, quantity, value.

• Identify risks: Is route by sea or air? Are ports known for delays or theft? Do goods need special packing or cold chain? Are buyers reliable or paying on credit?

• Consider Incoterm (FOB, CIF, CIP, etc). Do you or buyer assume risk at which point?

Step 2 – Choose the Right Insurance Type

• If shipping by sea or air a long way, marine cargo insurance is almost essential.

• If goods move on road within Nigeria or abroad, transit insurance.

• If you give credit (buyer pays later), export credit or trade credit insurance.

• If goods stored before shipping or after arrival, warehouse insurance.

Step 3 – Find a Licensed Insurer or Broker

• Use insurance companies or brokers experienced in export trade.

• Check they are licensed in Nigeria or in the country where goods transit or are stored.

• Ask for references or examples.

Step 4 – Get Quotes and Compare Coverages

• Ask for several quotes. Don’t pick just by price. Read coverage details.

• Compare sum insured, deductibles, exclusions (what is not covered).

• See whether quotes include loading, unloading, handling, delays.

Step 5 – Prepare Required Documents

Insurers will ask for:

• Invoice or pro‑forma invoice (value of goods).

• Bill of lading / airway bill.

• Packing list.

• Description of goods, packing method.

• Route and mode of transit.

• Buyer information if credit insurance.

Step 6 – Pay Premium and Get Policy

• Once you accept quote, you pay premium (single or periodic).

• Keep copy of the policy.

• Ensure you have certificate of insurance (document showing cover) to present to buyer or bank.

Step 7 – Monitor Transit & Handle Claims Properly

• Follow packing and handling instructions. Good packing reduces risk.

• Keep tracking, know when goods leave, when arrive, condition on arrival.

• If damage occurs: document (take photos), preserve packaging, report quickly to insurer. Submit claim with required documents.

Key Factors That Affect Cost of Export Insurance (Premium Influencers)

These are what make your insurance cost high or low.

1. Value of Goods
   The higher the goods’ value, the higher the sum insured, and so the premium goes up.

2. Mode of Transport
   Sea freight is longer and riskier than air for some risks; road transport adds risk of accident, theft.

3. Distance & Route
   Longer journeys, dangerous routes (high piracy, bad roads, security risk) cost more.

4. Type of Goods
   Perishables, fragile items, expensive electronics, dangerous substances have higher risk and cost more.

5. Packing and Packaging Quality
   Strong, proper packing helps reduce damage. If packaging is poor, insurer may ask more or exclude certain risks.

6. Incoterms and Responsibility
   If you accept more responsibility (e.g. CIF, CIP), you take risk longer; that increases cost. If you transfer risk to buyer early (FOB, EXW, etc.), less cost.

7. Previous Claims History
   If you’ve had many claims before, insurer may see you as high risk and charge higher premium.

8. Storage / Handling before or after Transport
   If goods are stored poorly or handled many times, risk of damage/theft increases; cost rises.

9. Insurance Type and Coverage Level
   “All risk” policies cost more than “named perils”. Higher deductible (you pay more if loss) means lower premium; lower deductible means higher premium.

Pros and Cons of Insuring Exported Goods

Like anything, there are good points and drawbacks.

Pros

• Financial protection: If goods are lost or damaged, insurance helps you recover cost.

• Confidence in business: Buyers, banks, partners trust you more. Insurance shows you are serious.

• Risk sharing: You do not carry all risk alone; insurer helps bear losses.

• Better contract terms: You can offer more competitive Incoterms, knowing you have insurance.

• Continuity of business: Even when disaster happens, insurance lets you bounce back.

Cons

• Cost: Premiums can be expensive, especially for high‑value or risky goods.

• Complexity: Policies have many details; exclusions, fine print. It is easy to miss something.

• Documentation and claims burden: You need to keep records, do paperwork, respond quickly if issues occur.

• Potential delays in claims: Insurance pay‑out may take time. If goods are damaged, you may wait.

• Moral hazard & misuse: If export process is negligent, insurer may reject claim.

Comparison: Different Insurance Options Side‑by‑Side

Let’s compare typical insurance options you might choose.

Examples: Real‑Life Scenarios

These examples show how insurance works in practice.

Example 1: Exporter of Cashew Nuts to Europe

• You grow or buy cashew nuts in Nigeria, process and pack them. You ship by sea from Lagos to Antwerp.

• Risks: moisture damage, spoilage, insect attack, sea water damage, theft at port, delayed shipment, buyer default.

• What to insure: marine cargo insurance (all risks), transit from your warehouse to Lagos port, packing quality, buyer pays on credit—so export credit insurance may help.

Example 2: Textiles Exporter Shipping Fabrics by Air to USA

• Fabrics are lightweight but delicate; you ship by air.

• Risks: handling damage, water, stains, tears, delay, wrong documentation.

• Insurance: air cargo insurance, named perils or all risk depending on value, insurance of packaging, maybe storage insurance if goods are stored before air cargo load.

Example 3: Electronics Exported to West Africa via Road and Sea

• Goods: small electronics. You ship from Nigeria to neighboring countries via road, then sea segments. Buyer pays on arrival.

• Risks: road accident, theft while on road, damage in port, delayed shipment, customs delays.

• Insurance: transit insurance (road + sea), proper packing, marine cargo insurance for sea legs, possibly buyer agreement on who handles what risk under Incoterm.

How Export Terms (Incoterms) Affect Insurance Obligations

When you export goods, the contract terms you use (Incoterms) decide who bears risk and who must insure what. Some key Incoterms:

• FOB (Free On Board): Exporter’s responsibility until goods are loaded onto ship; buyer bears risk after that point. Under FOB, exporter insures up to loading; beyond that buyer must insure.

• CIF (Cost, Insurance, Freight): Exporter must pay cost, freight, and insurance to cover risk till buyer’s port. EXPORTER must arrange insurance to destination port.

• CIP (Carriage and Insurance Paid To): Similar to CIF, but used for any mode of transport, not just sea. Exporter must provide insurance to named destination.

• EXW (Ex Works): Buyer picks up goods at exporter’s premises; buyer bears almost all risk and transportation; exporter’s insurance obligations minimal.

So, when negotiating contracts, be clear which Incoterm, who pays insurance, who buys insurance, what coverage required.

How Exporters in Nigeria Access Insurance & Key Providers

Here are sources and providers you may use in Nigeria to get export goods insurance.

• Export‑Import Bank of Nigeria (NEXIM): Provides export credit guarantees or insurance schemes to support exporters. This helps cover risk of buyer default or political risk from foreign countries.

• Marine Cargo Insurers: Nigerian insurance companies that provide marine or cargo insurance cover. For example, Sanlam Nigeria’s Marine/Cargo Insurance Plan covers sea and air movement of goods.Goods in Transit Insurance in Nigeria for moving goods by road, rail, inland waterways—from factory/warehouse to seaport, or within country. Some companies include LASACO Assurance, AXA Mansard, Consolidated Hallmark etc.

• Brokers and Trade Insurance Platforms: Some digital platforms help exporters compare insurance quotes, manage marine insurance, etc. e.g. NiryatSetu offers cargo insurance for exporters and trade credit insurance.

Challenges Nigerian Exporters Face in Insuring Goods

While insurance is helpful, exporters face obstacles. Knowing these helps you prepare.

• High Premiums for Risky Routes or Goods: If destination country is considered risky (political instability, high theft, piracy), insurance cost will be steep.

• Limited Local Insurer Capabilities: Some Nigerian insurers may not cover international transit well, or may have limited reinsurance arrangements.

• Documentation and Compliance Issues: Missing or incorrect documents (invoice, bill of lading, packing list) might lead to claim denial.

• Quality of Packaging and Pre‑shipping Risks: If goods aren’t well packed or protected, insurer may reject claim.

• Delay in Claims Payment: Sometimes processing claims internationally or across jurisdictions takes time.

• Currency Risk: If you insure in foreign currency, exchange rate fluctuations affect cost or replacement.

Cost Estimates: What Nigerian Exporters Might Pay

It is hard to give exact figures because costs depend on many factors (see above). But to help you plan, here are rough cost‑ranges for goods export insurance.

Note: Premium = amount to pay for insurance. Sum insured must cover cost of goods + freight + other charges if policy requires. Deductible (what you pay first) also matters.

Comparison: Local vs International Insurance Options

You may consider buying insurance from a Nigerian insurer vs an international insurer. Here is a comparison.

Checklist: What to Look for in a Good Export Insurance Policy

When choosing, check for these inside the policy:

• Sum insured includes full value + freight + handling + packing cost.

• Clear definition of start and end of transit (e.g. from your warehouse to buyer’s warehouse).

• Whether “All Risks” or “Named Perils”.

• Exclusions: what is not covered.

• Deductible amount.

• Claim process: what documents needed, timeline.

• Whether war risk, political risk, delay risk are included or optional.

• Handling of damages during loading/unloading.

• Whether insurance covers storage/warehouse if goods stored before or after transit.

Summary Table Before Conclusion

Conclusion

Exporting goods from Nigeria offers great opportunity. But with that opportunity comes risk. Goods can be damaged, lost, stolen, delayed, or never paid for. That risk can hurt your business, especially if you are working hard or are just starting. Insurance is your tool to protect the value of your goods, your reputation, and your investment.

By understanding what insurance is, why it matters, what types exist, how contracts (Incoterms) affect responsibilities, and how to buy good policy, you reduce risk and increase your chance of success. While cost and paperwork can be challenges, many exporters find the benefits far outweigh those drawbacks.

If you plan to export, don’t skip insurance. Start small if needed, get good advice, tailor coverage to your goods, and always read the contract. That way, even in uncertain times, your business is safer.