Watch: CIP Incoterms Explained

Video Transcript

“What does CIP mean in international shipping?

This 30-second guide explains Carriage and Insurance Paid To under Incoterms® 2020, including transportation, insurance, customs responsibilities and the point where cargo risk transfers from seller to buyer.

Under CIP, the seller clears the goods for export, delivers them to the first carrier and pays for transportation and cargo insurance to the named destination.

However, risk transfers to the buyer when the first carrier receives the goods—not when the shipment reaches its destination.

The seller must obtain broad cargo insurance, normally complying with Institute Cargo Clauses A or equivalent coverage, for at least 110% of the contract value.

The buyer handles import clearance and pays applicable duties and taxes.

CIP works with any transport mode, including road, rail, air, ocean and multimodal transportation.

Always specify both the origin delivery point where risk transfers and the named destination to which carriage and insurance are provided.”

How CIP Divides Costs and Risk

The seller completes export clearance, delivers the goods to the first carrier and pays for carriage to the named destination. The seller must also obtain the cargo-insurance coverage required under CIP unless the parties expressly agree otherwise.

The buyer assumes cargo risk when the goods are delivered to the first carrier. The buyer also completes import customs clearance and pays applicable import duties and taxes.

Because the transportation-cost endpoint and risk-transfer point are different, the sales contract should identify both locations precisely.

Read the complete CIP Incoterm guide for detailed information about carriage, insurance coverage, customs responsibilities and risk transfer.

You can also explore all Incoterms® to compare CIP with CPT, CIF and other international trade rules.

Incoterms® is a registered trademark of the International Chamber of Commerce.