CIP — Carriage & Insurance Paid To

Under Incoterms 2020, CIP requires the seller to arrange insurance complying with Institute Cargo Clauses A (or similar all-risk clauses), covering the full value of the goods plus 10% (110% total). This is the highest standard cargo insurance tier and covers all risks of physical loss or damage except specific exclusions (inherent vice, delay, war, strikes).

Incoterms 2010 required only minimum insurance (Institute Cargo Clauses C) under both CIP and CIF. Incoterms 2020 split these: CIP now requires all-risk cover (ICC A), while CIF retains the minimum cover (ICC C). The logic is that CIF is typically used for bulk commodities where minimum cover is standard trade practice, while CIP is used for higher-value manufactured goods where all-risk cover is appropriate.

The insurance policy must be transferable and made in favour of the buyer or other interested parties. The buyer should receive an insurance certificate or policy as part of the shipping documents. In practice, making claims on a seller-arranged policy can be more complex for the buyer — this is one reason buyers sometimes prefer to arrange their own insurance (use CPT).

Yes. Despite paying for freight and insurance all the way to the destination, the seller's risk exposure ends when goods are handed to the first carrier. The buyer bears the financial risk of total loss or damage during transit — but the seller's insurance is there to compensate. The insurance bridges the risk gap.

Under CIP, the buyer still handles import customs clearance and pays import duties at the destination. Under DDP (Delivered Duty Paid), the seller covers everything including import duties. DDP gives buyers a fully landed cost with no surprises; CIP leaves import costs to the buyer.

CIP stands for Carriage and Insurance Paid To. Under CIP, the seller pays for export customs, arranges and pays for the main international freight to the named destination, and provides all-risk cargo insurance (ICC A) for 110% of the contract value. Risk transfers to the buyer when goods are handed to the first carrier at origin — not at destination.

A pharmaceutical company in Portugal ships medical equipment to a hospital in Brazil on CIP São Paulo terms. The seller handles Portuguese export clearance, books air freight to Brazil, and arranges ICC A all-risk insurance for the shipment. When goods are handed to the air cargo carrier in Lisbon, risk passes to the Brazilian buyer. The buyer handles Brazilian import customs and duties on arrival.

CIP is one of eleven Incoterms defined in Incoterms 2020 (effective 1 January 2020). The 2020 edition upgraded CIP's insurance obligation from minimum ICC C to all-risk ICC A cover, making CIP significantly more protective for buyers than in previous editions. CIP applies to all transport modes: road, air, sea, rail, and multimodal.

CIP and CPT are nearly identical in structure — the seller pays freight to the named destination in both. The only difference is insurance: under CIP, the seller must arrange ICC A all-risk insurance; under CPT, no insurance obligation exists. If the buyer has their own cargo cover, CPT avoids paying for a seller-arranged policy they may not need or want.

CIP and CIF both require the seller to pay freight and arrange insurance. The differences are: (1) CIF is restricted to sea and inland waterway transport; CIP covers all transport modes. (2) CIF requires only minimum insurance (ICC C); CIP requires all-risk insurance (ICC A). For any containerised, air, road, or multimodal shipment, CIP is the appropriate choice over CIF.

The buyer is responsible for import customs clearance and all import duties under CIP. The seller's obligation ends when goods are handed to the first carrier and the required freight and insurance are in place. The buyer must have a customs broker or freight forwarder at the destination to handle arrival formalities.

Yes. CIP can be used for air freight, road freight, sea freight, rail, and any combination of these modes. This is one of CIP's main advantages over CIF, which is restricted to sea transport. For high-value goods shipped by air, CIP with ICC A all-risk insurance is often the preferred Incoterm.

CIP gives buyers a predictable cost up to the named destination (freight and insurance are the seller's cost), broad ICC A all-risk insurance protection, and a single party to deal with for logistics arrangements. The main limitation is that the buyer still handles import customs and duties, and risk has already transferred to the buyer by the time goods leave the origin.

Yes. The ICC A insurance requirement is the default in Incoterms 2020, but parties may agree in writing to a lower level of cover if both consent. However, this must be explicitly stated in the contract. Without a specific agreement to the contrary, the seller must provide ICC A all-risk cover.