CIF vs CIP
Both CIF (Cost, Insurance and Freight) and CIP (Carriage and Insurance Paid To) make the seller pay the main freight and insurance while risk passes to the buyer at origin. CIF is for sea only and needs minimum ICC (C) cover; CIP works for any mode and, under Incoterms 2020, needs all-risks ICC (A) cover.
Side by side
| Details | CIF | CIP |
|---|---|---|
| Transport | Sea and inland waterway only | Any mode, including containers and air |
| Risk passes | On board the vessel at the port of shipment | When handed to the first carrier |
| Seller pays carriage to | Named port of destination | Named place of destination |
| Minimum insurance | Institute Cargo Clauses (C), 110 % of value | Institute Cargo Clauses (A), 110 % of value |
| Job | CIF | CIP |
|---|---|---|
| Export clearance | Seller | Seller |
| Loading at origin | Seller | Seller |
| Main carriage | Seller | Seller |
| Insurance | Seller, ICC (C) minimum | Seller, ICC (A) |
| Unloading at destination | Buyer, unless in seller's freight contract | Buyer, unless in seller's freight contract |
| Import clearance and duties | Buyer | Buyer |
Why the insurance differs
ICC (C) covers major casualties such as fire, sinking or collision, but not theft or most handling damage. ICC (A) is all risks with listed exclusions. Incoterms 2020 raised CIP to (A) because CIP is mostly used for manufactured goods; CIF stayed at (C), which suits bulk commodities. Either party can agree a higher or lower cover in the contract.
Risk passes early under both
The seller pays to the destination, but the buyer owns the transit risk from origin. If goods are damaged at sea, the buyer claims on the insurance the seller bought, which is why the policy must name or be assignable to the buyer.
Which to choose
- Bulk or break-bulk loaded straight onto a ship: CIF.
- Containers, air freight, multimodal: CIP.
- Buyer has its own open-cover policy: consider CPT or CFR and let the buyer insure.
Sources
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Common questions
What is the difference between CIF and CIP?
CIF is sea only with minimum ICC (C) insurance; CIP works for any mode with ICC (A) all-risks insurance. Under both the seller pays freight and insurance, and risk passes at origin.
Can CIF be used for air freight?
No. CIF is for sea and inland waterway transport. Use CIP for air freight.
Which insurance is required under CIP?
Institute Cargo Clauses (A), covering 110 % of the contract value, unless the parties agree otherwise.
Who carries the risk in transit under CIF?
The buyer, from the moment the goods are on board at the port of shipment, even though the seller paid the freight and insurance.