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CIP Incoterm (Carriage and Insurance Paid to) - Use and Meaning

Incoterms
2 min read
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What is the CIP Incoterm (Carriage and Insurance Paid)


The CIP Incoterm or “Carriage and Insurance Paid to” states that the seller is responsible for bringing the goods to the destination, the cost of international freight, as well as insurance costs.


Under CIP, the Incoterms risk transfer point is different from the cost transfer point. The CIP risk transfer takes place when the goods have been accepted by the shipping carrier, be it at the terminal or port, and is a recommended Incoterm for containerized cargo.


The CIP Incoterm is versatile as it can be used for intermodal transportation.


Seller’s obligations under the CIP Incoterm


  • Delivery of goods and documents required
  • Packaging and wrapping
  • Inland transport in the country of origin
  • Customs handling fees at origin
  • Origin charges
  • International freight
  • Insurance

Buyer’s obligations under the CIP Incoterm


  • Payment of goods
  • Destination charges
  • Customs handling fees at destination
  • Inland transport at the destination country
  • Payment of duties and taxes

CIP insurance


The CIP Incoterm is one of just two Incoterms (the other being CIF) under which insurance is mandatory. In both cases, the seller is the party responsible for obtaining cargo insurance.


If, as a buyer, you are able to obtain better or cheaper insurance, consider opting for CPT instead, under which the seller is not contractually obliged to provide cargo insurance and you, as a buyer, can obtain your preferred insurance policy.

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