CIP Explained: Carriage and Insurance Paid To
CIP (Carriage and Insurance Paid To) is CPT plus insurance. The seller pays freight and arranges insurance (minimum ICC-A under Incoterms 2020) to the named destination. Risk still transfers at origin carrier handover.
What Is CIP?
CIP (Carriage and Insurance Paid To) is an Incoterms 2020 delivery term combining freight payment and insurance obligation. The seller pays freight and arranges insurance to the named destination. Works for all transport modes.
Key change in Incoterms 2020: CIP minimum insurance was raised to ICC-A (all risks). CIF (sea-only equivalent) remains at ICC-C (basic risks). This makes CIP more protective than CIF.
Responsibility Split
| Task | Seller | Buyer |
|---|---|---|
| Export customs | Yes | |
| Main freight | Yes | |
| Insurance (min ICC-A) | Yes | |
| Risk after carrier handover | Yes | |
| Import customs | Yes |
CIP vs CIF
| Factor | CIP | CIF |
|---|---|---|
| Modes | All | Sea only |
| Min insurance | ICC-A (all risks) | ICC-C (basic risks) |
| Risk transfer | Carrier handover | Ship's rail |
Frequently Asked Questions
Why ICC-A for CIP?
Incoterms 2020 raised CIP minimum to give buyers broader protection. Parties can contractually agree on lower coverage.
CIP vs CPT?
Only difference is insurance. CIP includes; CPT does not.
Insurance amount?
Minimum 110% of contract value. Premium typically 0.5-1.0% of cargo value.
When to use CIP?
Multi-modal transport where insured freight is needed. Road equivalent of CIF.
References
- ICC Incoterms 2020
- Institute Cargo Clauses
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