CIF: Cost, Insurance and Freight (Incoterms® 2020)
CIF (Cost, Insurance and Freight) means the seller pays the sea freight and cargo insurance to the named port of destination, but risk passes to the buyer when the goods are on board at the port of shipment. The insurance must be at least minimum ICC (C) cover for 110% of the contract value.
Quick facts
Where risk and costs pass from the seller to the buyer
SellerBuyer
How to write it
CIF + the named port of destination + Incoterms 2020, for example: CIF Mombasa Incoterms 2020.
What the seller does
- Clears the goods for export.
- Contracts and pays sea freight to the named port of destination.
- Buys cargo insurance on at least ICC (C) terms for 110% of the contract value, in the contract currency.
- Gives the buyer the bill of lading and the insurance policy or certificate.
What the buyer does
- Takes the risk once the goods are on board at the port of shipment, protected by the seller's insurance.
- Claims directly from the insurer if the goods are lost or damaged.
- Pays unloading and destination charges not included in the freight.
- Clears the goods for import and pays duties and taxes.
When to use it
CIF is common for commodities and for sales paid by letter of credit, where the bank wants to see an insurance document. It is for sea and inland waterway only; for containers the ICC recommends CIP.
Common mistakes
- Assuming all-risks cover. CIF only requires minimum ICC (C) cover; if the buyer wants ICC (A), agree it in the contract.
- Using CIF for air freight or courier shipments, where it does not apply. Use CIP.
- Insurance in a different currency from the contract or below 110% of the value.
CIF vs CIP
CIF is sea only and needs minimum ICC (C) cover. CIP works for any mode, including containers and air, and needs all-risks ICC (A) cover.
Seller and buyer obligations, article by article (A1–A10 / B1–B10)
Incoterms 2020 gives each side ten matching articles. Here they are in plain language; the ICC text and your contract decide.
| Seller (A) | Buyer (B) | |
|---|---|---|
| A1/B1 General obligations | Provide the goods and the commercial invoice as the contract requires, plus any other proof of conformity it asks for. Documents may be paper or electronic if agreed or customary. | Pay the price as the contract requires. Documents may be paper or electronic if agreed or customary. |
| A2/B2 Delivery and taking delivery | Deliver by placing the goods on board the ship at the port of shipment, or procure goods so delivered. | Take delivery when the goods are on board, and receive them from the carrier at the named port of destination. |
| A3/B3 Transfer of risks | Bears all risk until the goods are on board. | Bears all risk from loading; if the goods are lost or damaged at sea it claims on the insurance the seller bought. |
| A4/B4 Carriage | Contract or procure carriage on usual terms, by the usual route, in a ship of the type normally used, from the port of shipment to the named port of destination; meet transport-related security requirements. | No obligation to the seller. |
| A5/B5 Insurance | Buy cargo insurance at its own cost covering at least Institute Cargo Clauses (C), for at least 110% of the contract price in the contract currency, from delivery to at least the named port of destination, and give the buyer the policy or certificate. At the buyer's request and cost, add wider cover such as Clauses (A) or (B), war or strikes cover, if available. | Give the seller, on request, the information needed for any additional cover it asks for. |
| A6/B6 Delivery or transport document | Provide, at its cost, the usual transport document to the agreed port of destination. It must cover the goods, be dated within the shipment period, let the buyer claim the goods at destination and, unless agreed otherwise, sell them in transit; a negotiable bill of lading goes to the buyer as a full set of originals. | Accept the transport document if it conforms to the contract. |
| A7/B7 Export and import clearance | Carry out and pay for export clearance. Where applicable, help the buyer, at its request, risk and cost, with documents and information for transit and import clearance. | Carry out and pay for transit and import formalities. |
| A8/B8 Checking, packaging, marking | Pay for the checks (quality, measuring, weighing, counting) needed to deliver, and pack and mark the goods for the transport, unless the trade customarily ships them unpacked or the parties agreed specific packing. | No obligation to the seller. |
| A9/B9 Allocation of costs | Pay all costs until the goods are on board, the loading and sea freight, the insurance premium, any unloading at the port of discharge and transit costs that the carriage contract puts on the seller, the transport document and export clearance. | Pay all costs from delivery except those on the seller under the carriage contract, unloading at the port of destination including lighterage and wharfage unless the carriage contract puts them on the seller, any additional insurance it requested, and import duties and taxes. |
| A10/B10 Notices | Notify the buyer that the goods have been delivered, and give any notice the buyer needs to receive them. | If entitled to decide the shipping time or the point of receipt in the port of destination, give the seller sufficient notice. |
A plain-language summary of Incoterms® 2020 for everyday use. The full rules are published by the International Chamber of Commerce (ICC), and your contract wording decides. Incoterms® is a registered trademark of the ICC.
All 11 Incoterms 2020 rules
Guides on this topic
Common questions
What is the full form and meaning of CIF?
CIF stands for Cost, Insurance and Freight, one of the 11 Incoterms® 2020 rules. Transport: Sea and inland waterway. Delivery and risk pass to the buyer: On board the ship at the port of shipment. Main freight paid by: Seller. Insurance: Seller must insure: ICC (C), 110% of value. Export clearance: Seller. Import clearance and duties: Buyer.
What is the CIF value of a shipment?
The value of the goods plus the insurance and freight to the port of destination. Customs in many countries, including the EU, include transport and insurance up to the point of entry in the customs value, while the United States leaves out international freight and insurance. Check the importing country's rules.
What insurance does CIF require?
Cargo insurance on at least Institute Cargo Clauses (C) terms for 110% of the contract value, in the contract currency, covering the goods from delivery to at least the port of destination.
When does risk pass under CIF?
When the goods are on board the ship at the port of shipment. The seller pays the freight and insurance to the destination, but any damage at sea is claimed by the buyer from the insurer.
Who pays THC (terminal handling charges) under CIF?
The seller pays the carriage to the destination, but under Incoterms 2020 articles A9/B9 it pays unloading costs at destination only if they were for its account under its contract of carriage. Carriers and terminals often bill destination THC to the consignee, so state in the quote and contract who pays origin and destination THC.
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