Incoterms 2020
CIP Incoterm (Carriage and Insurance Paid To) – Meaning, Risk & Costs
CIP (Carriage and Insurance Paid To) under Incoterms 2020: where risk transfers, who pays for carriage, and seller and buyer obligations.
- Rule
- CIP – Carriage and Insurance Paid To (named place of destination)
- Transport mode
- Any Mode of Transport
- Insurance required
- Yes, by the seller
- Export clearance
- Seller
- Import clearance
- Buyer
- Main carriage
- Seller
Carriage and Insurance Paid To (CIP) is the same as CPT, but the seller must also contract for insurance against the buyer's risk of loss or damage to the goods during carriage.
A major change in Incoterms 2020 increased the minimum insurance requirement for CIP from Institute Cargo Clauses (C) to Institute Cargo Clauses (A), which provides "all risks" coverage. This is a higher level than CIF.
CIP is ideal for high-value goods or when the buyer requires proof of insurance for financing purposes.
When risk transfers under CIP
When goods are handed to the first carrier
When costs transfer under CIP
At named place of destination
Seller obligations under CIP
- Deliver goods to first carrier
- Contract and pay for carriage to destination
- Contract and pay for insurance (ICC A minimum)
- Clear goods for export
- Provide transport and insurance documents
Buyer obligations under CIP
- Accept delivery when goods arrive
- Handle import customs clearance
- Pay import duties and taxes
- Pay unloading costs
- Bear residual risks not covered by insurance
Who is responsible for what under CIP
- Export customs clearance: Seller
- Import customs clearance: Buyer
- Loading: Seller
- Main carriage: Seller
- Unloading: Buyer
- Delivery to destination: Buyer
Common uses of CIP
- High-value goods
- Letter of credit transactions
- Air freight
- Multimodal transport
CIP is best for
- Valuable cargo requiring insurance
- When buyer needs insurance certificate
- L/C transactions requiring insurance
Risks to watch with CIP
- Insurance only covers minimum requirements
- Buyer may need additional coverage
- Risk still transfers at origin
More in this directory
- 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
- FAS Incoterm (Free Alongside Ship) – Meaning, Risk & Costs
Frequently asked questions
What does CIP mean in shipping?
CIP stands for Carriage and Insurance Paid To. Carriage and Insurance Paid To (CIP) is the same as CPT, 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 CIP?
When goods are handed to the first carrier
Who pays for main carriage under CIP?
The seller pays for main carriage under CIP.
Who handles customs clearance under CIP?
Under CIP, the seller handles export clearance and the buyer handles import clearance.
Is insurance required under CIP?
Yes. CIP requires the seller to arrange insurance.