Cost, Insurance and Freight (CIF)
The seller pays sea freight to destination and takes minimum cover (ICC(C)), yet risk passes once goods are on board. Sea/inland-waterway only.
Cost, Insurance and Freight (CIF) means the seller loads on board, clears for export, pays sea freight to the named destination port, and takes out marine cargo insurance for the buyer's benefit. As with CFR, risk passes to the buyer when the goods are on board at the port of shipment, but the seller additionally bears the insurance cost. Under Incoterms 2020 the minimum cover for CIF is Institute Cargo Clauses ICC(C) (basic cover); the buyer may agree a higher level if needed.
CIF is for sea and inland-waterway transport only and is one of the most common quoting bases for Chinese exports. The customary insured amount is 110% of the CIF value (i.e. cost plus freight plus a 10% notional profit), with premium = insured amount × rate. To derive CIF from CFR/FOB use the closed-form solution CIF = (C+F) / (1 − 1.1 × rate). Practical notes: the CIF seller need only take minimum cover, so if the goods need broader protection (fragile, moisture-sensitive) the buyer should require a higher level and bear the difference; and since risk has passed to the buyer, in a sea casualty it is the buyer who claims against the insurer under the policy.
CIF Quote (reverse)
Derive an insurance-inclusive CIF price from cost and freight.
CIF = (C+F) ÷ (1 − markup × rate), closed-form to avoid circularity.
Calculations follow common industry rules and are for reference only; actual billing/liability is governed by your carrier, forwarder and contract.
FAQ
- How is the CIF insured amount calculated, and why 110%?
- International practice insures 110% of the CIF value — cost plus freight plus 10% to cover the buyer's expected profit and related expenses. Premium = insured amount × rate. If you only have an FOB/CFR price, first solve CIF = (C+F) / (1 − 1.1 × rate), then insure on that basis.
- Is the seller's minimum CIF cover enough?
- CIF defaults to the minimum ICC(C) (basic cover), which is limited and mainly covers major casualties. For fragile, moisture-sensitive or high-value goods the buyer should require an upgrade to ICC(A) or similar in the contract, with the extra premium usually on the buyer. Note CIF (sea) defaults to ICC(C), whereas CIP (any mode) defaults to all-risks ICC(A) — they differ.
- Under CIF, if goods are damaged at sea, who claims against the insurer?
- The buyer claims. Under CIF risk passed to the buyer on loading; although the seller pays for the policy, the policy benefit runs to the buyer, who claims against the insurer in a sea casualty as the policy holder.
Related terms
Sources: https://iccwbo.org/business-solutions/incoterms-rules/incoterms-2020/ · https://academy.iccwbo.org/incoterms/article/incoterms-2020-cip-or-cif/