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CIP - Carriage and Insurance Paid

Jul 5, 2021

Person standing next to cargo in front of truck and cubes spelling CIP for the Incoterm CIP when shipping with Shipa Freight.

What is the CIP Incoterm (Carriage and Insurance Paid)

Under the CIP Incoterm, or Carriage and Insurance Paid, the seller is required to bring the goods to the destination and shoulder the costs of international freight. The seller is also obligated to obtain insurance for the goods.

In CIP, the risk transfer point and cost transfer point differ. The former only transfers to the buyer when the goods have been accepted by the carrier. Hence, the CIP Incoterm is highly recommended for containerized cargo.

Further, the CIP Incoterm can be used for both ocean and sea freight and is applicable regardless of the mode of transport.

Truck driver showing a thumbs up for shipping with Shipa Freight

The Seller’s Obligations Under the CIP Incoterm

  • Deliver the goods and the documents required
  • Checking, packing, and marking
  • Bear all risks of loss of or damage to the goods until they have been delivered
  • Notify the buyer that the goods have been delivered
  • Contract of carriage
  • Customs handling fees at origin
  • Origin charges
  • Export clearance
  • International freight
  • Insurance

The Buyer’s Obligations Under the CIP Incoterm

  • Pay for the goods
  • Bear all risks from the time the goods have been delivered
  • Destination charges
  • Customs handling fees at destination
  • Import clearance
  • Duties and taxes
  • No obligation to make a contract of carriage
  • No obligation to obtain insurance - this is for the seller’s account.

Mandatory Insurance Under the CIP Incoterm

Under the CIP Incoterm, insurance is mandatory for the seller. The buyer can obtain additional insurance if they prefer. However, if the buyer is capable of obtaining better insurance, it’s recommended that the CPT Incoterm is used instead where the seller is not required to obtain insurance and the buyer can get their own insurance policy.

What Does the Seller Pay for Under the CIP Incoterm?

  • All costs relating to the goods until they have been delivered
  • Costs of loading the goods
  • Transport-related security costs
  • Costs for unloading, if for the seller’s account under the contract of carriage
  • Costs of transit, if for the seller’s account under the contract of carriage
  • Costs of providing usual proof that the goods have been delivered
  • Costs of insurance
  • Duties and taxes

What Does the Buyer Pay for Under the CIP Incoterm?

  • All costs relating to the goods from the time they have been delivered
  • Costs of transit, if for the buyer’s account under the contract of carriage
  • Costs of unloading, if for the buyer’s account under the contract of carriage
  • Costs of additional insurance, if applicable