Incoterms Rules
CFR vs CIF: what is the difference
CFR and CIF differ only in insurance. Under CIF the seller must insure the cargo for the buyer at the minimum level, Institute Cargo Clauses (C); under CFR nobody is obliged to insure. In both rules the seller pays the freight to the destination port, and the risk passes on board at the port of shipment.
Side by side
| CFR Cost and Freight | CIF Cost, Insurance and Freight | |
|---|---|---|
| Transport | Sea and inland waterway | Sea and inland waterway |
| Export clearance | Seller | Seller |
| Import clearance | Buyer | Buyer |
| Main carriage paid by | Seller | Seller |
| Insurance | Not required | Seller, minimum cover |
| Risk passes to the buyer | When the goods are loaded on board the vessel at the port of shipment | When the goods are loaded on board the vessel at the port of shipment |
Which one to choose
Choose CFR when the buyer has its own cargo insurance, such as an open cover policy, or needs wider cover than the minimum. Choose CIF when the buyer wants the seller to arrange the insurance and the minimum cover is acceptable.