Why marine cargo on Nigerian imports has to be insured locally
Nigerian importers are required to place marine cargo insurance with a locally licensed insurer. What the rule means in practice and where it catches people out.
An importer opens a Form M, the bank asks for a marine insurance certificate from a Nigerian insurer, and the certificate they were sent by the supplier overseas turns out to be useless for the purpose. This happens constantly.
The rule
Goods imported into Nigeria are required to be insured with an insurer registered in Nigeria. A policy bought abroad, or bundled into a CIF price by the supplier, does not satisfy it. The requirement is tied into the Form M process, so in practice the bank will not process the documentation without local cover.
Why buying CIF is the usual trap
Under CIF terms the seller arranges the insurance, which sounds convenient until you need to claim. The policy is written under someone else's law, with an insurer who has no presence here, and the person holding the cargo when it is damaged is not the person named on the cover.
Buying on CFR or FOB terms and arranging your own marine cover locally costs slightly more attention and considerably less grief.
What marine cargo usually covers
- Physical loss or damage to goods in transit by sea, air, road or inland waterway
- Loading and offloading
- General average, which is the shared cost when cargo is sacrificed to save a voyage
- Specified marine perils, with war and strikes normally excluded unless arranged separately
General average is worth understanding before you need it. If a vessel gets into trouble and cargo is jettisoned, every cargo owner on that ship contributes to the loss, including the ones whose goods arrived intact. Without cover, that contribution comes out of your pocket before your container is released.
Insure the landed cost, not the invoice value. Freight, duty and handling are all money you have spent and will not get back if the goods never arrive.
