Incoterms 2020
CIF Incoterm (Cost, Insurance and Freight) – Meaning, Risk & Costs
CIF (Cost, Insurance and Freight) under Incoterms 2020: where risk transfers, who pays for carriage, and seller and buyer obligations.
- Rule
- CIF – Cost, Insurance and Freight (named port of destination)
- Transport mode
- Sea and Inland Waterway
- Insurance required
- Yes, by the seller
- Export clearance
- Seller
- Import clearance
- Buyer
- Main carriage
- Seller
Cost, Insurance and Freight (CIF) is like CFR, but the seller must also contract for insurance against the buyer's risk of loss or damage to the goods during carriage.
Unlike CIP (which requires ICC A "all risks" coverage), CIF only requires minimum coverage under Institute Cargo Clauses (C). This provides coverage for named perils only. Buyers wanting more comprehensive coverage should negotiate for higher insurance or arrange their own additional coverage.
CIF is extensively used in international trade, particularly for commodities and letter of credit transactions.
When risk transfers under CIF
When goods are on board at port of shipment
When costs transfer under CIF
At named port of destination, including insurance
Seller obligations under CIF
- Deliver goods on board vessel
- Contract and pay for freight to destination
- Contract and pay for insurance (ICC C minimum)
- Clear goods for export
- Provide B/L and insurance certificate
Buyer obligations under CIF
- Accept delivery at destination port
- Handle import customs clearance
- Pay import duties and taxes
- Pay unloading costs
- Bear residual risks
Who is responsible for what under CIF
- Export customs clearance: Seller
- Import customs clearance: Buyer
- Loading: Seller
- Main carriage: Seller
- Unloading: Buyer
- Delivery to destination: Buyer
Common uses of CIF
- International commodity trade
- Letter of credit transactions
- When buyer needs insurance certificate
- Sea freight
CIF is best for
- L/C transactions requiring insurance docs
- Commodity trades
- When seller arranges freight and insurance
Risks to watch with CIF
- Only minimum insurance (ICC C)
- Risk still transfers at origin
- Buyer may need additional insurance
More in this directory
- CIP Incoterm (Carriage and Insurance Paid To) – Meaning, Risk & Costs
- CPT Incoterm (Carriage Paid To) – Meaning, Risk & Costs
- DAP Incoterm (Delivered at Place) – Meaning, Risk & Costs
- DDP Incoterm (Delivered Duty Paid) – Meaning, Risk & Costs
- DPU Incoterm (Delivered at Place Unloaded) – Meaning, Risk & Costs
- EXW Incoterm (Ex Works) – Meaning, Risk & Costs
Frequently asked questions
What does CIF mean in shipping?
CIF stands for Cost, Insurance and Freight. Cost, Insurance and Freight (CIF) is like CFR, but the seller must also contract for insurance against the buyer's risk of loss or damage to the goods during carriage.
When does risk transfer under CIF?
When goods are on board at port of shipment
Who pays for main carriage under CIF?
The seller pays for main carriage under CIF.
Who handles customs clearance under CIF?
Under CIF, the seller handles export clearance and the buyer handles import clearance.
Is insurance required under CIF?
Yes. CIF requires the seller to arrange insurance.