CIF vs CIP - Explained

Quick Overview

CIF and CIP are Incoterms® rules published by the International Chamber of Commerce (ICC). Under both, the seller arranges and pays for carriage and cargo insurance to the named destination. Their main differences concern transport modes, delivery and risk-transfer points, and the default insurance cover required.

What Is CIP?

CIP means Carriage and Insurance Paid To. The seller arranges and pays for transportation and cargo insurance to the named destination.

Risk normally transfers to the buyer when the seller delivers the goods to the carrier at the agreed delivery point. Where several carriers are involved, this is normally the first carrier.

CIP can be used for any transport mode, including containerised and multimodal shipments. Paying for transportation to the destination does not mean the seller retains cargo risk until arrival.

What Is CIF?

CIF means Cost, Insurance and Freight. The seller arranges and pays for sea or inland-waterway transportation and cargo insurance to the named destination port.

Delivery and risk transfer normally occur when the goods are placed on board the vessel at the port of shipment. The buyer therefore bears the transport risk after loading, although the seller pays freight and provides the required insurance to the destination port.

CIF vs CIP at a Glance

Difference Between CIF and CIP

Mode of Transport

CIF applies only to sea and inland-waterway transport. CIP can apply to any transport mode or a combination of modes.

Containerised Cargo

CIP can be used for containerised cargo, including FCL and LCL shipments. Neither the container format nor the shipment size automatically determines the appropriate Incoterm.

Why CIP Often Fits Container Shipping Better

Containers are commonly handed to a carrier at a terminal before vessel loading. CIP can align contractual delivery and risk transfer with that earlier handover.

Under CIF, the seller normally retains risk until the goods are on board the vessel. Earlier terminal handover does not automatically transfer that risk or create an uninsured gap. Insurance protection depends on the actual policy.

Transport Obligations

Under both CIF and CIP, the seller contracts and pays for carriage and the required cargo insurance to the named destination. The seller also handles export formalities where applicable.

The buyer handles import formalities, applicable transit formalities, and associated duties and taxes. Destination handling and unloading charges depend on the rule and the carriage contract; check which costs are included.

Transfer of Risk

Under CIF, risk normally transfers when the goods are on board the vessel at the port of shipment.

Under CIP, risk normally transfers when the goods are delivered to the carrier at the agreed delivery point, usually the first carrier.

Under neither rule does payment of freight to destination postpone risk transfer until arrival.

Insurance Requirements

Both CIF and CIP require the seller to arrange cargo insurance for the buyer’s transit risk.

Under Incoterms® 2020, the default cover is Institute Cargo Clauses (C), or equivalent, for CIF and Institute Cargo Clauses (A), or equivalent, for CIP. Record any agreed variation clearly.

Insurance must normally cover at least 110% of the contract price in the contract currency, extending from contractual delivery to at least the named destination port under CIF or named destination place under CIP.

The rules do not require both parties to purchase duplicate policies. Clauses (A) provide broader protection than Clauses (C), but exclusions and conditions still apply.

Worked Example: the Same Shipment Priced under CIF vs CIP

Scenario. A textile trader sells $50,000 of raw cotton bales Mumbai, India → Rotterdam, Netherlands in H1 2026 (breakbulk, not containerized). Compare the same shipment under CIF (port-to-port, minimum ICC Clause C insurance) vs CIP (multimodal, minimum ICC Clause A insurance).

CIF can suit bulk or breakbulk shipments delivered on board a vessel, with carriage paid to the destination port. CIP can suit containerised or multimodal shipments where delivery occurs at an earlier carrier handover. Choose the rule around the actual delivery arrangement, transport mode and agreed insurance requirements.

The cost ranges above are illustrative assumptions, not current freight or insurance quotations. Insurance premiums depend on the goods, route, insured value, coverage, exclusions and insurer. Obtain shipment-specific quotations rather than applying a fixed premium ratio between Clauses (A) and Clauses (C).