Incoterms® 2020 · Sea and inland waterway only
CIF (Cost, Insurance and Freight) under Incoterms® 2020
CIF is CFR plus a duty on the seller to insure the goods for the buyer during the sea voyage. Risk still passes to the buyer once the goods are on board at the port of shipment, and the minimum cover is only Institute Cargo Clauses (C) for 110% of the contract price.
- Risk transfer
- Risk passes to the buyer when the goods are on board the vessel at the port of shipment; the buyer is protected through the insurance the seller has bought.
- Cost transfer
- The seller pays costs until the goods are on board, ocean freight and the insurance premium to the named destination port; the buyer pays destination charges (unless included in the contract of carriage) and all costs thereafter.
- Mode of transport
- Sea and inland waterway only
- Insurance
- Seller buys, minimum ICC (C)
Who does what along the delivery chain
- 1Loading at seller's premisesSeller
- 2Export clearanceSeller
- 3Transport to port/terminal of departureSeller
- 4Loading onto main carriageSeller
- 5Main carriageSeller
- 6Cargo insuranceSeller obligation (insurance)
- 7Unloading at destinationBuyer
- 8Import clearanceBuyer
- 9Import duties & taxesBuyer
- 10Delivery to final destinationBuyer
Seller's obligations
- Provide the goods, a commercial invoice and suitable packaging.
- Carry out and pay for export clearance.
- Contract and pay for carriage to the named port of destination.
- Buy insurance on at least ICC (C) or similar clauses, for at least 110% of the contract price, in the contract currency.
- Provide the buyer with the insurance policy or certificate allowing it to claim directly.
- Provide the bill of lading or usual transport document to the buyer.
- Notify the buyer of shipment.
Buyer's obligations
- Pay the price.
- Bear risk from the moment the goods are on board at the port of shipment.
- Take delivery at the destination port and pay unloading and destination charges, unless included in the contract of carriage.
- Carry out and pay for import clearance and import duties.
- If wider cover is wanted (ICC A, war, strikes), ask the seller to buy it at the buyer's cost.
- Provide the seller with any information needed to buy additional cover on request.
Use it when
- Bulk or directly loaded cargo where the seller has competitive freight and insurance.
- The buyer wants a delivered price to the destination port including insurance.
- Payment by L/C requiring a set of documents with a bill of lading and an insurance document.
- String sales of goods afloat.
Avoid it when
- Containers delivered at the yard, where CIP fits better.
- High-value or fragile goods needing all-risks cover when the contract does not raise the insurance level.
- The buyer wants to choose the carrier and the insurer.
Common mistakes
- Believing CIF means the seller bears risk up to the destination port.
- Believing CIF cover is "all risks", when the minimum is only ICC (C).
- Using CIF for air or container cargo without considering CIP.
- The buyer does not check whether the policy allows claims to be paid directly in the buyer's country.
Practice in Vietnam
CIF is familiar to Vietnamese importers, for example "CIF Hai Phong" or "CIF Cat Lai", because the CIF price is close to the dutiable import value. But buying CIF means letting the overseas seller choose the carrier, forwarder and insurer, so Vietnamese buyers often face high destination charges and difficult claims against foreign insurers. Many importers are switching to FOB or FCA and insuring locally to regain control. When exporting CIF, Vietnamese companies declare customs value on an FOB basis, deducting international freight and insurance.
Worked example
A factory in Hai Phong imports cold-rolled steel coils from Korea on "CIF Hai Phong Port, Vietnam, Incoterms® 2020" for USD 800,000. The seller books the vessel from Busan, pays freight and buys ICC (C) cover for USD 880,000. Because steel is vulnerable to rust from rainwater and moisture, risks not covered by ICC (C), the buyer asks for ICC (A) and pays the extra premium. At Hai Phong the buyer pays discharge and delivery order fees, clears import customs and pays duties.
Frequently asked questions
What must CIF insurance cover?
At least Institute Cargo Clauses (C) or similar, for at least 110% of the contract price, in the contract currency, from the point of delivery to at least the named port of destination.
Why did Incoterms 2020 not raise CIF cover to ICC (A)?
The ICC kept ICC (C) for CIF because CIF is mostly used for bulk commodities, where parties are used to that level of cover. The parties can still agree higher cover.
Can the buyer claim directly against the insurer?
Yes. The seller must provide a policy or certificate enabling the buyer, or anyone with an insurable interest, to claim directly from the insurer.
Incoterms® is a registered trademark of the International Chamber of Commerce (ICC). This content is for general guidance and does not replace legal or banking advice for a specific transaction.
Incoterms® 2020 responsibility matrix
| Rule | Loading at seller's premises | Export clearance | Transport to port/terminal of departure | Loading onto main carriage | Main carriage | Cargo insurance | Unloading at destination | Import clearance | Import duties & taxes | Delivery to final destination |
|---|---|---|---|---|---|---|---|---|---|---|
| EXW | B | B | B | B | B | – | B | B | B | B |
| FCA | S | S | S | B | B | – | B | B | B | B |
| FAS | S | S | S | B | B | – | B | B | B | B |
| FOB | S | S | S | S | B | – | B | B | B | B |
| CFR | S | S | S | S | S | – | B | B | B | B |
| CIF | S | S | S | S | S | S* | B | B | B | B |
| CPT | S | S | S | S | S | – | B | B | B | B |
| CIP | S | S | S | S | S | S* | B | B | B | B |
| DAP | S | S | S | S | S | – | B | B | B | S |
| DPU | S | S | S | S | S | – | S | B | B | S |
| DDP | S | S | S | S | S | – | B | S | S | S |
- S Seller
- B Buyer
- S* Seller obligation (insurance)
- – Not required / negotiable
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