Incoterms and shipping
CIF (Cost, Insurance and Freight)
Definition
Like CFR, with the seller also buying minimum cargo insurance for the voyage.
CIF at a glance
- Transport
- Sea and inland waterway only
- Risk passes
- When the goods are on board the vessel at the port of shipment
- Insurance
- Seller, minimum cover (Institute Cargo Clauses C) for 110 % of the contract value
Under CIF the seller pays freight to the named port of destination and buys cargo insurance for the buyer's benefit. Risk still passes when the goods are on board at the port of shipment.
The minimum cover under CIF is Institute Cargo Clauses (C), which covers a limited list of major events. Buyers who want all risks cover should agree a higher level in the contract or use CIP. Quotes such as CIF Jebel Ali or CIF Hamburg are common in chemical trade.
Related terms
- Incoterms 2020The ICC's eleven standard trade terms that set who pays for and bears the risk of each step of delivery.
- FCA (Free Carrier)The seller clears the goods for export and hands them to the buyer's carrier at a named place.
- FOB (Free on Board)The seller delivers the goods on board the buyer's vessel at the named port of shipment, cleared for export.
- DAP (Delivered at Place)The seller bears costs and risk until the goods arrive at the named destination, ready for unloading.
- DDP (Delivered Duty Paid)The seller delivers to the named destination, cleared for import with duties and taxes paid.