CIP

What Is CIP (Carriage and Insurance Paid To) in Incoterms® 2020?

CIP (Carriage and Insurance Paid To) is an international trade term defined by the Incoterms® 2020 rules, published by the International Chamber of Commerce (ICC). Under CIP, the seller delivers the goods to a carrier and covers the costs of freight as well as compulsory insurance up to the named destination. However, the risk transfers to the buyer as soon as the goods are handed over to the first carrier.

Seller’s Responsibilities

• Delivery of Goods: Deliver the goods to the carrier, at an agreed place and time, ready for transport according to the contract specifications (quality, quantity, packaging).
• Packaging: Properly package goods based on the chosen mode of transport and likely transit hazards.
• Export Clearance: Complete all export formalities, including licenses, permits, security checks, and customs exit procedures in the country of origin.
• Main Carriage: Arrange and pay for transportation to the named destination.
• Insurance: Obtain insurance coverage for the buyer’s benefit, at least equivalent to the minimum coverage of Institute Cargo Clauses (A) or similar, up to the named place of destination.
• Transport and Insurance Documentation: Provide the buyer with all necessary transport and insurance documents, enabling the buyer to claim delivery and compensation if damage or loss occurs during transit.
• Notification: Inform the buyer that the goods have been delivered to the carrier.

Buyer’s Responsibilities

• Import Clearance: Handle all import procedures, including customs entry, payment of duties, and compliance with local regulations at destination.
• Onward Transport: Take responsibility for unloading, further inland transportation, and any additional charges beyond the named point of destination.
• Risk: Assume all risks of loss or damage to the goods once they are handed over to the carrier at the departure point (even though insurance is arranged by the seller).
• Insurance Claims: In the event of loss or damage, the buyer is responsible for making insurance claims using the provided documentation.
• Payment: Settle all agreed contract payments with the seller.

CIP Responsibilities Table

Key Notes

• Broad Application: CIP is suitable for any mode or combination of transport, including multimodal shipments.
• Higher Insurance Coverage: Compared to CIF, CIP requires higher insurance coverage (Institute Cargo Clauses A), protecting the buyer better during transit.
• Risk Transfer: Even though the seller arranges freight and insurance, risk passes to the buyer earlier—once goods are with the first carrier.

Incoterms 2020: Core Points Comparison Table

Term	Applicable Mode of Transport	Point of Risk Transfer	Seller's Responsibility	Buyer's Responsibility
EXW	Any mode	Upon delivery at seller’s premises	Only makes goods available; not responsible for transportation, clearance, or insurance	Responsible for all transportation, clearance, insurance costs, and risks
FCA	Any mode	Upon delivery to the carrier	Handles export clearance, delivers goods to carrier	Arranges transportation, pays all subsequent charges, assumes risk
CPT	Any mode	Upon delivery to the first carrier	Pays carriage to named destination, handles export clearance	Responsible for unloading at destination, import clearance, insurance costs, and risks
CIP	Any mode	Upon delivery to the first carrier	Pays carriage and insurance to named destination, handles export clearance	Responsible for unloading at destination, import clearance, assumes remaining risks
DAP	Any mode	Upon delivery at destination (not unloaded)	Bears costs and risks to the named destination, not responsible for unloading	Responsible for unloading, import clearance, and all related costs and risks
DPU	Any mode	After unloading at destination	Bears costs and risks for transportation and unloading at destination	Responsible for import clearance costs and risks
DDP	Any mode	Upon delivery at destination (duty paid)	Bears all costs (including import duties and taxes) and risks	Only needs to receive the goods
FOB	Sea / Inland waterway	When goods are loaded on board the vessel	Handles export clearance, pays loading charges	Arranges main carriage, pays freight and insurance, assumes risk post-loading
CFR	Sea / Inland waterway	When goods are loaded on board the vessel	Pays carriage to port of destination, handles export clearance	Handles insurance, import clearance, assumes risk after loading
CIF	Sea / Inland waterway	When goods are loaded on board the vessel	Pays carriage and insurance to destination port, handles export clearance	Responsible for import clearance, assumes risk after loading

Source: ICC Incoterms® 2020 – CIP Rule