Incoterms® 2020 · Any mode of transport
CIP (Carriage and Insurance Paid To) under Incoterms® 2020
CIP is CPT plus a duty on the seller to insure the goods for the buyer to destination. Under Incoterms 2020 the minimum cover for CIP is Institute Cargo Clauses (A), all risks subject to exclusions, for 110% of the contract price. Risk passes to the buyer when the goods are handed to the first carrier.
- Risk transfer
- Risk passes to the buyer when the seller hands the goods to the first carrier at the place of delivery in the country of export; the buyer is protected by the insurance the seller has bought.
- Cost transfer
- The seller pays delivery costs, carriage and the insurance premium to the named destination; the buyer pays costs after delivery that are not part of the contract of carriage.
- Mode of transport
- Any mode of transport
- Insurance
- Seller buys, ICC (A)
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 destination.
- Buy insurance on ICC (A) or similar clauses, for at least 110% of the contract price, in the contract currency, from the point of delivery to at least the named destination.
- Provide the insurance policy or certificate to the buyer.
- Provide the usual transport document and notify the buyer of delivery.
Buyer's obligations
- Pay the price.
- Bear risk from the moment the goods are handed to the first carrier.
- Take delivery at destination and pay unloading, unless included in the contract of carriage.
- Carry out and pay for import clearance and import duties.
- Pay for any additional cover requested, such as war or strikes.
- Provide the seller with any information needed to buy additional cover.
Use it when
- High-value goods such as machinery, equipment and electronics needing broad cover.
- Container, air or multimodal shipments where the seller arranges freight and insurance.
- Payment by L/C requiring an insurance document.
- The buyer wants a delivered price to destination including insurance.
Avoid it when
- Low-value goods where ICC (A) premium is disproportionate, unless a lower level is agreed.
- The buyer already has an annual open cover, leading to double insurance.
- Bulk cargo loaded directly onto the vessel, where CIF fits better.
Common mistakes
- Still applying ICC (C) cover to CIP out of Incoterms 2010 habit.
- Believing the seller bears risk up to destination.
- Not extending cover to the final inland destination when the named place is an inland warehouse.
- Not checking that the insured amount and currency match the L/C.
Practice in Vietnam
CIP suits Vietnamese companies importing machinery, production lines and electronic equipment from Europe, Japan or Korea on a delivered basis to the factory or an ICD. Because CIP 2020 requires ICC (A), Vietnamese buyers are better protected than under CIF. When exporting CIP, Vietnamese sellers can insure with local insurers that have survey networks abroad. For containers, CIP is the appropriate counterpart of CIF. The declared export value must still exclude international freight and insurance.
Worked example
A packaging manufacturer in Ho Chi Minh City buys a printing press from Germany on "CIP Song Than ICD, Ho Chi Minh City, Vietnam, Incoterms® 2020" for EUR 1.2 million. The seller hands the containers to the carrier in Hamburg, pays freight to Song Than ICD and buys ICC (A) cover for EUR 1.32 million. When one container is damaged during transhipment in Singapore, the Vietnamese buyer claims directly against the insurer under the insurance certificate. The buyer clears import customs at the ICD and pays haulage to its factory.
Frequently asked questions
How does CIP insurance under Incoterms 2020 differ from 2010?
Incoterms 2010 required only ICC (C) for CIP. Incoterms 2020 raised it to ICC (A), the widest cover, although the parties can agree a lower level.
Can parties agree ICC (C) cover for CIP?
Yes. Incoterms are default rules, so the contract can state a lower level, for example "CIP … Incoterms® 2020, insurance on ICC (C)".
How does CIP differ from CIF?
CIF is for sea transport only, with risk passing on board and minimum ICC (C) cover. CIP works for any mode, with risk passing at handover to the first carrier and minimum ICC (A) cover.
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
Need advice on delivery terms or documents for a specific shipment?
GLG specialists review your contract, Incoterms and document set before you sign with your trading partner.