Incoterms Rules
CIF vs CIP: what is the difference
CIF is for sea and inland waterway transport only, and the seller insures at the minimum level, Institute Cargo Clauses (C). CIP works for any mode of transport, and since Incoterms 2020 the seller insures at the broad level, Institute Cargo Clauses (A). Under CIF the risk passes on board at the port of shipment, under CIP at handover to the first carrier.
Side by side
| CIF Cost, Insurance and Freight | CIP Carriage and Insurance Paid To | |
|---|---|---|
| Transport | Sea and inland waterway | Any mode |
| Export clearance | Seller | Seller |
| Import clearance | Buyer | Buyer |
| Main carriage paid by | Seller | Seller |
| Insurance | Seller, minimum cover | Seller, broad cover |
| Risk passes to the buyer | When the goods are loaded on board the vessel at the port of shipment | When the goods are handed to the first carrier |
Which one to choose
Use CIF for bulk cargo loaded directly onto a vessel. Use CIP for containers handed over at a terminal and for multimodal or land shipments. In either rule the parties may agree a different level of cover, but they must state it in the contract.