When goods are being transported internationally, the importer is exposed to risks long before the consignment arrives at the port in Ghana. Cargo can be damaged by fire, seawater, rough handling, accidents, theft, flooding or other insured perils during transportation
By Anthony Ayivi | 24HourBusiness.org
For many businesses in Ghana, insurance is still regarded as an additional cost that can be avoided, particularly when an overseas supplier says that the goods are already insured.
But for importers, that approach can create a much bigger financial risk.
When goods are purchased abroad, the risk does not begin when the shipment reaches Ghana. Cargo can be lost or damaged during inland transportation, loading, handling, sea or air transit, discharge, storage and onward delivery.
More importantly, Ghana's customs and insurance framework makes marine cargo insurance an issue that importers should understand before their goods leave the country of export.
The smart question is therefore not:
“Will Customs charge me for insurance?”
It is:
“Are my goods properly insured against the risks associated with this shipment?”
Under Regulation 95 of the Customs Regulations, 2016 (L.I. 2240), where a supplier of imported goods liable to ad valorem duty does not insure the goods against loss or damage, an insurance value is added to the value of the goods for the purpose of calculating customs duty.
The prescribed rates stated in the regulation are:
This is an important point for every importer to understand.
The insurance value added for customs purposes is not the same thing as an insurance policy.
Suppose a company imports goods by sea with a C&F value of US$100,000.
Where the applicable insurance value is 0.875%, the calculation would be:
US$100,000 × 0.875% = US$875
That US$875 is added to the customs value for duty assessment.
But what has the importer actually received for that US$875?
Not an insurance policy.
The importer has not purchased cargo cover for US$100,000. The amount is simply an insurance value used in determining the customs value.
That distinction is critical.
There is sometimes a misunderstanding that once Customs applies an insurance value to an import declaration, the importer has somehow dealt with the insurance requirement.
That is not the case.
Customs valuation serves a revenue and duty-assessment purpose.
Insurance serves a risk-transfer and financial-protection purpose.
If a container is damaged during transit, Customs does not become the insurer of the goods merely because an insurance value was included in the customs calculation.
If the cargo is destroyed, stolen or damaged by an insured peril, the importer needs an appropriate insurance policy under which a claim can potentially be made.
The difference can be significant.
An importer could therefore find themselves in a situation where an insurance value has been included in the customs calculation while the actual cargo remains uninsured.
That is a risk no serious importer should deliberately accept.
The issue goes beyond Customs valuation.
Section 222(1) of the Insurance Act, 2021 (Act 1061) provides that a person who imports goods, other than personal effects, into Ghana shall insure the goods with an insurer licensed under the Act. The provision appears under the Act's provisions on Marine Insurance.
Section 222 also addresses the placement of marine cargo and hull business with insurers and provides rules concerning insurance obtained in Ghana or outside Ghana.
This means that businesses involved in international trade should not treat marine cargo insurance as merely an optional expense to be considered after the shipment has arrived.
It should be considered before the goods are exposed to transit risk.
This is perhaps the most important question for Ghanaian importers.
If the law provides for marine insurance and Customs regulations provide for an insurance value where applicable, why should an importer wait until the goods reach Ghana before thinking about insurance?
The risk has already existed for days or weeks.
Consider what may happen to a shipment between the supplier's warehouse and the importer's premises:
Supplier
↓
Inland transportation
↓
Export terminal
↓
Loading
↓
Sea/Air transit
↓
Discharge
↓
Port handling
↓
Customs clearance
↓
Inland transportation
↓
Importer/Warehouse
At every stage, there can be exposure to loss or damage.
Insurance should therefore be part of the pre-shipment risk-management process, not an afterthought at the port.
Imagine a Ghanaian company imports machinery worth US$250,000.
The importer has already committed substantial capital to:
During transit, a significant portion of the machinery is damaged.
If the importer has appropriate marine cargo insurance, the loss may become an insurance claim, subject to the terms, conditions, exclusions and deductible applicable to the policy.
Without appropriate insurance, however, the importer may have to bear the financial consequences of the loss or pursue whatever contractual remedies may be available against other parties.
The original insurance premium may have been a relatively small cost compared with the potential loss.
That is the essence of risk management:
Pay a manageable premium to transfer a potentially catastrophic financial risk.
This is one of the statements importers should investigate carefully.
A supplier saying “the goods are insured” does not automatically mean that the importer has adequate protection.
The importer should ask:
These questions become particularly important when dealing with high-value shipments.
Importers should also understand the relationship between Incoterms and insurance.
Whether a transaction is conducted under FOB, CFR, CIF, EXW, CIP or another Incoterm can affect who is responsible for arranging transportation, insurance and other aspects of the transaction, as well as when risk transfers between seller and buyer.
An importer should therefore never assume:
“The supplier is responsible, so my cargo is fully insured.”
The contract and the actual insurance documentation should be checked.
A misunderstanding about an Incoterm can leave a business with a significant uninsured exposure.
There is an important change in mindset that Ghana's importing community needs to embrace.
Insurance should not be viewed simply as:
“Another cost associated with Customs.”
The issue is much bigger.
Customs valuation is concerned with determining the value on which applicable duties are assessed.
Insurance is concerned with protecting the financial interest in the goods against covered risks.
If an importer does not arrange the appropriate insurance, an insurance value may still be relevant for customs valuation under Regulation 95 of L.I. 2240. But that does not transform the customs valuation into an insurance policy.
The importer could therefore face both:
a customs-related cost and an uninsured commercial risk.
That is not an efficient approach to managing an international trading business.
For regular importers, marine cargo insurance should become part of the company's standard procurement and logistics checklist.
A simple process could be:
Confirm the goods, value, supplier and contractual terms.
Determine who is responsible for insurance and when risk transfers.
Confirm the appropriate cover and sum insured.
Keep the policy or certificate with the shipment documentation.
Ensure the insurance arrangements are in place before the cargo is exposed to the relevant transit risks.
Proceed with the normal import and clearance process.
Maintain the insurance documentation and records for future reference.
This makes insurance a planned business control, rather than an emergency response.
Exporters should also understand their insurance responsibilities.
The precise obligation can depend on the applicable law, contractual arrangements, Incoterm and the point at which risk transfers from seller to buyer.
A Ghanaian exporter should therefore know:
International trade works best when both sides clearly understand who carries the risk at each stage of the journey.
Before your goods leave the supplier's premises, ask:
“Are these goods properly insured?”
Not when the container reaches Tema.
Not when Customs raises the declaration.
Not after the cargo has been damaged.
Before the journey begins.
For a business importing machinery, vehicles, electronics, pharmaceuticals, agricultural inputs, industrial equipment, spare parts or other commercial goods, the value at risk can be substantial.
The cost of proper insurance should therefore be considered alongside freight, duties, port charges and other import costs.
International trade creates risks that businesses cannot completely eliminate.
But those risks can be identified, managed and transferred.
Ghanaian importers should understand the difference between a customs insurance value and actual marine cargo insurance.
A customs valuation does not protect your cargo.
A properly arranged insurance policy can provide financial protection against covered loss or damage, subject to its terms and conditions.
The smart importer therefore does not wait for Customs.
The smart importer insures before shipment.
Because when cargo is lost or damaged, Customs will deal with the duty assessment — your insurer is the party that can respond to a covered loss.
Customs Regulations, 2016 (L.I. 2240), Regulation 95 — Insurance
The regulation provides for an insurance value to be added to the value of certain imported goods where the supplier has not insured the goods against loss or damage, with the stated rates of 1% of C&F for air freight and 0.875% of C&F for sea freight.
Insurance Act, 2021 (Act 1061), Section 222 — Marine Insurance
Section 222(1) provides that a person importing goods, other than personal effects, into Ghana shall insure the goods with an insurer licensed under the Act.
Before your next shipment, speak to a licensed insurance professional about the appropriate marine cargo cover for your transaction.
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