Cargo insurance is the document exporters most often treat as an afterthought until the first claim gets rejected. A container is holed during transhipment, a consignment arrives water-damaged after sitting on an open quay in the rain, or a truck moving goods inland from the port is hijacked before it reaches the buyer’s warehouse. The exporter then discovers that nobody actually held a policy covering that loss, at that point in the journey. The gap is rarely dishonesty. It is confusion over who is responsible for arranging cover under the agreed Incoterm, combined with a policy bought in a hurry that does not match the goods, the route or the packaging.
Who Arranges Cargo Insurance Under Incoterms
The Incoterm you agree with your buyer decides who is obliged to buy cargo insurance, not just who pays freight. Under CIF and CIP, the seller must arrange cover for the buyer’s benefit. Since the 2020 revision, the minimum required cover differs between the two: CIF still only requires the narrow Institute Cargo Clauses (C), while CIP requires the broader Institute Cargo Clauses (A), unless the parties agree otherwise in the contract. If you export under one of the Incoterms that actually matter for a first export, check which clause set your policy quotes — insurers will happily sell you the cheaper, narrower cover if you don’t specify.
Under FOB, FCA, CFR and EXW, the buyer is responsible for insurance from the point risk transfers to them. That leaves the exporter exposed for everything before that point — inland haulage to the port, port handling, waiting time at the terminal — unless they arrange separate cover for that leg. Manufacturers who assume “the buyer is insuring it” often mean the buyer is insuring the sea leg only, and nobody has looked at what happens between the factory gate and the ship’s rail.
What a Standard Marine Policy Covers
Marine cargo insurance is not one product. At the narrow end, ICC(C) covers a short list of major casualties: fire, vessel sinking or stranding, collision, and general average. It does not cover theft, rough handling, wetting, or the container simply going missing. At the broad end, ICC(A) covers all risks of physical loss or damage except a defined set of exclusions, which typically include war and strikes risks (insurable separately), inherent vice of the goods themselves, and loss caused by inadequate packing.
Two practical gaps catch exporters out repeatedly:
- Inland transport before and after the sea leg is not automatically included. You need a policy written on a “warehouse to warehouse” basis, not “port to port,” if you want continuous cover.
- Extended storage in a bonded customs area beyond the period the policy assumes can take the cargo outside the insured transit, which matters on routes where port congestion or clearance delays are common.
Your Own Policy or the Forwarder’s Cover
Most freight forwarders will offer to add insurance to the quote as a convenience. It is worth reading what is actually being sold. In many cases this is cover under the forwarder’s own liability terms, which caps compensation at a fixed amount per kilogram of the shipment — a figure that is usually far below the commercial invoice value of the goods, particularly for higher-value processed food or manufactured products. That is a liability limitation, not cargo insurance. When you are choosing a freight forwarder for West Africa, ask directly whether the insurance on offer is a genuine marine cargo policy against invoice value, or the forwarder’s own capped liability. If it’s the latter, buy a separate policy from an insurer or broker, ideally one with experience of the specific route and port of destination.
What Voids a Claim in Practice
Insurers reject claims for reasons that are usually avoidable rather than dramatic:
- Packaging judged inadequate for the route or climate, which shifts the loss into the “inherent vice” or “insufficient packing” exclusion.
- Late notification. Most policies set a short window for reporting loss or damage and require a surveyor’s inspection before goods are moved on or unloaded further.
- A declared insured value that does not match the commercial invoice, which complicates or delays settlement even when the loss itself is not disputed.
- Missing or incomplete documentation of the damage at the point it was discovered — photographs, a signed discrepancy note from the carrier or port authority, and the surveyor’s report all matter more than they seem to at the time.
Before the Container Leaves
Confirm, in writing, who is arranging cargo insurance under the agreed Incoterm before you book the shipment, not after. If it falls to you, ask the insurer explicitly for warehouse-to-warehouse cover under ICC(A), and confirm the insured value includes an appropriate margin over the invoice value rather than matching it exactly, since most insurers expect this as standard practice. Keep packing photographs and any packing certificates on file, and know in advance which local surveyor or agent you or your buyer would call if a claim needs to be opened at destination. None of this prevents damage happening. It is what decides whether the loss is recoverable or simply absorbed.
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