Incoterms Rules
CPT vs CIP: what is the difference
CPT and CIP differ only in insurance. Under CIP the seller must insure the goods for the buyer at the broad level, Institute Cargo Clauses (A); under CPT nobody is obliged to insure. In both rules the seller pays the carriage to the named destination, and the risk passes when the goods are handed to the first carrier.
Side by side
| CPT Carriage Paid To | CIP Carriage and Insurance Paid To | |
|---|---|---|
| Transport | Any mode | Any mode |
| Export clearance | Seller | Seller |
| Import clearance | Buyer | Buyer |
| Main carriage paid by | Seller | Seller |
| Insurance | Not required | Seller, broad cover |
| Risk passes to the buyer | When the goods are handed to the first carrier | When the goods are handed to the first carrier |
Which one to choose
Choose CPT when the buyer has its own cargo insurance or wants to pick the insurer itself. Choose CIP when the buyer wants the seller to arrange the insurance; the broad cover suits manufactured goods and container shipments. Under both rules the buyer carries the risk in transit, so the cargo should be insured from the handover to the first carrier.