CPT vs CIP

	CPT — Carriage Paid To	CIP — Carriage and Insurance Paid To
Transport mode	Any mode	Any mode
Risk transfers	When goods are handed to the first carrier at origin	When goods are handed to the first carrier at origin

CPT — Carriage Paid To

CIP — Carriage and Insurance Paid To

Transport mode

Any mode

Risk transfers

When goods are handed to the first carrier at origin

Key Difference

Both CPT and CIP require the seller to pay carriage (freight) to the named destination, and both transfer risk to the buyer as soon as goods are handed to the first carrier at origin — well before arrival. The only difference is that CIP additionally requires the seller to arrange all-risk cargo insurance to the destination; under CPT, insurance is entirely optional and left to whichever party wants coverage to arrange and pay for it themselves.

Use CPT when...

Insurance is being arranged separately by the buyer, or the goods are low-value enough that formal cargo insurance isn't commercially necessary.

Use CIP when...

You want the insurance requirement built into the trade term itself, removing any ambiguity about whether the shipment is covered in transit.

FAQ

Is CPT or CIP better for the buyer?

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CIP is generally better for the buyer, since it guarantees all-risk insurance coverage is in place for the entire journey to destination, even though the buyer bears the transit risk from the first carrier handover in both terms. Under CPT, the buyer would need to arrange their own insurance to be covered.

Does the seller choose the insurance level under CIP?

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The seller arranges the insurance, but Incoterms 2020 sets the minimum standard at all-risk (Institute Cargo Clauses A) for CIP — buyer and seller can agree a higher level, but not lower, without amending the contract terms explicitly.

Why would anyone use CPT instead of CIP if insurance is so important?

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Cost and flexibility — CPT lets the buyer arrange their own insurance (perhaps through an existing policy that's cheaper than what the seller could offer), or skip insurance entirely for low-risk, low-value cargo where the premium isn't worth it.