CIP: Carriage and Insurance Paid To (Incoterms® 2020)
CIP (Carriage and Insurance Paid To) means the seller pays the freight and insurance to the named destination, but risk passes to the buyer when the goods are handed to the first carrier. The insurance must be all-risks ICC (A) cover for at least 110% of the contract value.
Quick facts
Where risk and costs pass from the seller to the buyer
SellerBuyer
How to write it
CIP + the named place of destination + Incoterms 2020, for example: CIP Nairobi Incoterms 2020.
What the seller does
- Clears the goods for export.
- Contracts and pays for carriage to the named destination.
- Buys cargo insurance on ICC (A) terms for at least 110% of the contract value, in the contract currency, covering at least to the destination.
- Gives the buyer the transport document and the insurance policy or certificate.
What the buyer does
- Takes the risk from the handover to the first carrier, protected by the seller's insurance.
- Claims directly from the insurer if goods are lost or damaged.
- Pays unloading at destination unless the carriage contract includes it.
- Clears the goods for import and pays duties and taxes.
When to use it
CIP suits manufactured goods sent by container, air or courier when the buyer wants insured delivery. It is the any-mode version of CIF, but with a higher level of insurance.
Common mistakes
- Buying ICC (C) cover out of habit. Since 2020, CIP requires all-risks ICC (A) unless the contract says otherwise.
- Insurance that stops at the port instead of reaching the named destination.
- Forgetting to send the insurance certificate, which letters of credit often require.
CIP vs CIF
CIF is for sea and inland waterway only and needs just minimum ICC (C) cover. CIP works for any mode and needs all-risks ICC (A) cover. For containers, CIP is the better fit.
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 handing the goods over to the carrier the seller has contracted, at the agreed point at the place of delivery, or procure goods so delivered. | Take delivery when the goods are handed to the first carrier, and receive them from the carrier at the named place of destination. |
| A3/B3 Transfer of risks | Bears all risk until the goods are handed to the first carrier. | Bears all risk from that handover; if the goods are lost or damaged in transit it claims on the insurance the seller bought. |
| A4/B4 Carriage | Contract or procure carriage on usual terms, by a usual route and in the customary manner, from the place of delivery to the named place 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 (A), all risks, for at least 110% of the contract price in the contract currency, from delivery to at least the named place of destination, and give the buyer the policy or certificate. Add war or strikes cover at the buyer's request and cost, if available. | Give the seller, on request, the information needed for any additional cover it asks for. |
| A6/B6 Delivery or transport document | If customary or requested, provide at its cost the usual transport document for the agreed carriage. Where agreed or customary, it must let the buyer claim the goods at destination and sell them in transit; a negotiable document in several originals goes to the buyer as a full set. | 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 delivery, the freight, the insurance premium, any unloading 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, 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 dispatch time or the point of receipt at 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 CIP?
CIP stands for Carriage and Insurance Paid To, one of the 11 Incoterms® 2020 rules. Transport: Any mode. Delivery and risk pass to the buyer: Handed to the first carrier in the country of shipment. Main freight paid by: Seller. Insurance: Seller must insure: ICC (A), 110% of value. Export clearance: Seller. Import clearance and duties: Buyer.
What insurance does CIP require?
Cargo insurance on Institute Cargo Clauses (A) terms, the all-risks level, for at least 110% of the contract value, in the contract currency, from delivery to at least the named destination.
Who can claim on the insurance under CIP?
The buyer. The seller buys the policy, but it must allow the buyer, or anyone with an insurable interest, to claim directly from the insurer.
Who pays THC (terminal handling charges) under CIP?
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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